After Huawei, it is Ericsson which finds itself in rough weather in the mega GSM tender floated by BSNL. Ericsson’s commercial bid is observed to be on the higher side as compared to the price the firm quoted in the last GSM tender of BSNL.

Business Line reports that in the last tender, BSNL had awarded the contract to Ericsson for a price les than Rs 4000 for 2G as well as 3G lines. The price included complimenting aspects of network infrastructure such as towers and billing software. But this time, the vendor’s price is Rs 3000 for 2G lines which does not includes IT, software, billing solution or passive infrastructure. Moreover the price for each 3G line is at Rs 7000.

BSNL’s vigilance officials have raised concerns about this fact and brought it to the notice of concerned officials. The officials in turn have assured that the company is in talks with Ericsson to arrive at a lower price.

The difference in the contract terms of the tender floated in 2006 and the one floated last year is that the earlier tender required vendors to provide maintenance services for only three years while the current tender requires them to do it for seven years. Furthermore BSNL has also asked for replacement of network rolled out till 2007 leading to increased cost to the vendors selected for the current tender. The capacity of the network too is almost double this time around.

However, BSNL CMD, Kuldeep Goyal had stated last year in November that the company expected to benefit from the falling commodity prices. “Earlier, the projected value for the contract was Rs 40,000 crore, but given the current market conditions of falling commodity prices, we expect some benefit in cost," he had said. He had stated that the company would negotiate aggressively with the short listed players.

BSNL unfortunately has a limited scope for negotiations since there is no competition in any of the circles where vendors have been selected. Ericsson is the only vendor in East and North while Huawei is the only vendor in South. Huawei is known to be very aggressive on its price mix; the concerns against the company are limited to the technological aspects. With the focus now on financial aspects of the tender, it seems that attention will now shift from Huawei to Ericsson.