The tender - actually a series of tenders - is expected to create a mad stampede by vendors seeking the business, just as happened when BSNL issued a tender for 45.4 million lines in 2006 and 18 companies rushed in to vie for the business (TelecomWeb news break, April 10, 2006). The 2006 tender was never fully awarded, instead becoming mired in political controversy. BSNL eventually awarded a 15 million line deal to state-owned vendor ITI Ltd. and a $1 billion deal to Ericsson for 13 million lines. Nokia Siemens was offered an $875 million deal that it declined because of the lowball price.
This time around BSNL has set up some strict qualification rules on who can bid, limiting that to companies that in the past have done GSM rollouts of at least 20 million lines and annual revenues of at least $2 billion. Bidders must also be able to provide proof of having set up between 2-5 million 3G lines across a minimum of two countries. Winning bidders also face a caveat that they manufacture the GSM EDGE Radio Access Network (GERAN), which forms the core of the networks equipment, by themselves rather than subcontracting that job.
Even with all those conditions it leaves the field open to what will no doubt be vigorous competition. Ericsson, Nokia Siemens Networks, Motorola, Nortel Networks, Alcatel- Lucent, Huawei and ZTE are all known to be eligible - and all are said to have already been sent packages with tender details. They have until July 16 to place their bids, and estimates are that it will be 6-8 months until winners are declared.
As a sidelight, Motorola had been disqualified from the 2006 tender because of a clause requiring that bidders be profitable, a controversial clause that Motorola bitterly protested to no avail. The new tender has no such clause.
One highly controversial clause, however, is still there and mandated by the Indian government: About 30 percent of the contract, or 31 million lines, must go to ITI. It wasn't clear, though, if that 30 percent is included in the 93 million line count, or whether it will be on top of that count - in which case BSNL is building an even more massive 124 million line upgrade. In any case, BSNL has asked the government to drop that requirement, so far to no avail. If the requirement remains it looks like an instant massive win for Alcatel-Lucent, which supplies gear to ITI.
The tender also includes a series of caveats that make it impossible for any one company to win an order for more than 50 million of the lines. For starters, according to details posted on the BSNL web site, the order is being broken up geographically into four tenders. Vendors will get to bid for 25 million lines each in India's western, north and southern zones and for 18 million lines in the east. No vendor will be allowed to win more than two of the zones.
In a bid to further intensify competition, BSNL divided each tender into four components: 2G lines, 3G lines, infrastructure and operating and business support systems (OSS & BSS). Companies can bid individually for any of the four components, and a company can also bid for all the components. The also potentially opens up the bidding to third party infrastructure and IT service providers, rather than only to suppliers who can do the entire job.