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BSNL revokes capacity tender, but launches another

The state-owned Indian operator BSNL will this month offer a new tender to increase the capacity for 15 million GSM lines, after revoking its previous tender for 5.5 million lines. The new offer’s value is reportedly estimated at roughly INR5,500 crore (US$1.25 billion).

Reportedly, the original offer was retracted after a legal challenge from a vendor, alleged to be Ericsson. The Swedish vendor did not participate in the bidding, taking exception a rule requiring bidders to share software and hardware codes with BSNL for all the equipment that would be provided if they won the contract.

This is the third time that BSNL’s tender to increase its network capacity has been reissued. The original 2008 tender had an estimated value of US$10 billion, and aimed at adding a further 93 million GSM lines to boost the operator’s network capacity. The scope of the offer may have been too great however, as it was cancelled and replaced last year by a vastly downsized tender for 5.5 million lines.

The continued postponement of the tender has resulted in BSNL nearing the limit of its GSM capacity in the majority of its telecom circles. Along with stiff competition from private operators, this has been a factor in BSNL’s financial woes – its net losses have increased by 50% over the past year, with the firm making its first ever net loss in the 2009/10 fiscal year.

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