State-run telecom major Bharat Sanchar Nigam Ltd (BSNL) has decided to cancel its existing tender for 5.5 million GSM lines and invite fresh bids for 15 million GSM lines in June. The new tender is estimated to be around Rs 5,000-6,000 crore.

Following the decision of an equipment provider firm, which did not participate in the bidding process, to move court, BSNL decided to cancel the tender and issue a new one to overcome capacity constraints, a senior official from BSNL told Business Standard.

It had also cancelled a 93-million-line tender worth Rs 35,000 crore amid controversies that the bidding process lacked competition and the capacity addition was too high for the company. The BSNL tender process was referred to the committee headed by Sam Pitroda for a review after a number of controversies — ranging from home ministry objections on Chinese equipment firms to legal battles by disqualified vendors.

Due to the scrapping of the tender, BSNL has been facing acute shortage in its capacity addition. The PSU has been steadily losing market share in the highly competitive mobile market in India and its current market share stands at 12 per cent.

For the first time since inception, BSNL had posted a net loss of Rs 1,823 crore on revenue of Rs 32,046 crore in 2009-2010. BSNL was expected to post a net loss of about Rs 2,500 crore on revenue of Rs 31,738 crore in 2010-11. Due to the declining financial health and market share, the government is formulating a strategy to revive the loss-making unit over the next six months.