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Moto Stalls BSNL's Wireless Tender

Bharat Sanchar Nigam Ltd. (BSNL) 's plan to award $4.8 billion in network expansion contracts has been fraught with delays, and this time it's Motorola Inc. (NYSE: MOT) that has thrown a spanner in the works.

The vendor claims that it was unfairly disqualified from the technical evaluation process that saw Ericsson AB (Nasdaq: ERIC) and Nokia Corp. (NYSE: NOK) emerge as frontrunners -- and has taken its complaints to the High Court in New Delhi. (See Ericsson, Nokia Bid Low for BSNL.)

According to local press reports, the court ruled Thursday that the operator must not award the contracts before the next hearing on November 16.

BSNL is in the process of evaluating financial bids from Ericsson and Nokia before making a final decision. The operator will split the order for 45.5 million GSM lines between the two companies, giving 60 percent to the vendor offering the lowest price per line -- Ericsson so far -- and the remaining 40 percent to the second lowest bidder.

BSNL had intended to award the contracts within the next few weeks. It has already set aside an additional 15 million line deal for state-run vendor ITI Ltd. and its partner, Alcatel (NYSE: ALA; Paris: CGEP:PA). (See Alcatel Picks Up BSNL Business.)

Prompted in part by a spat with Huawei Technologies Co. Ltd. , which last year defaulted on a mobile contract, BSNL put together a stringent list of conditions that bidders had to meet to be considered for the contracts. (See BSNL Shuns Huawei.) Of the 18 companies that requested paperwork laying out the conditions, only five submitted a bid. (See BSNL Sizes Up Five Bidders.) Like Motorola, ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) was dropped at the technical evaluation stage, while Siemens Communications Group is merging with Nokia.

Among the requirements was the stipulation that vendors have 20 million GSM lines already installed in networks in at least 10 countries, including at least one network with over 2 million lines. Bidders were also required to have supplied two UMTS (3G) networks with a capacity of 5 million subscribers. The companies must be profitable with sales of at least $1.8 billion per year. And at least 30 percent of the equipment supplied must be manufactured in India. (See BSNL: Love Me Tender!)

Motorola will now put in a response to BSNL's claim in court that it failed to meet the eligibility conditions.

— Nicole Willing, Reporter, Light Reading

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