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Ericsson, Nokia to get $5 bln India BSNL contract

NEW DELHI - Telecom majors Ericsson and Nokia are set to grab a $5 billion contract from India’s Bharat Sanchar Nigam Ltd. (BSNL) after Motorola decided to withdraw a legal challenge, a BSNL official said on Monday.

Bids for the 45.5 million GSM lines contract were ordered by a court to be put on hold after Motorola, which did not figure among the winners, challenged the BSNL in October.

‘As things stand now, Ericsson gets 60 percent and Nokia the rest based on the bids,’ an official at state-owned BSNL, who did not wish to be identified, told Reuters.

‘We will take about 10 days to tie up the loose ends and place the equipment order to the companies.’

The official did not give bid details, but a source had told Reuters in October the firm’s bid was at $107 per line, valuing Ericsson’s share of the tender at $2.92 billion.

India is the world’s fastest growing mobile services market, boosted by call tariffs of as low as 2 US cents a minute. It has a total of nearly 121.4 million GSM users after adding 6.1 million new users in March.

Motorola said on Monday it was withdrawing its case against the award and looked forward to its continued partnership with BSNL, India’s third-largest cellular operator.

The US firm said the withdrawal did not reflect any change from its stand on the tender award.

‘In view of the tremendous telecom growth taking place in the country and BSNL’s petition of capacity constraints to have its share in this expansion, Motorola has decided to withdraw the case filed in the Delhi High Court,’ the firm said.

Over the past one year BSNL, also India’s top telecoms firm by sales, has been facing a critical shortage of GSM equipment that has resulted in it ceding market share to larger rivals Bharti Airtel Ltd. and Reliance Communications Ltd.

BSNL’s networks are present in 21 of the 23 circles or zones making up the domestic telecoms sector. Its smaller state-run sibling, Mahanagar Telephone Nigam Ltd., is in the remaining two -- Mumbai and Delhi.

Reliance and Bharti have a nationwide presence.

The BSNL official said nearly half the new equipment was earmarked for rural areas, where nearly two-thirds of India’s 1.1 billion people live and where networks need improvement.

India’s cellular services remain largely city-centric more than a decade after their launch but carriers are now furiously expanding into vast swathes of rural India.

The five equipment vendors that had submitted technical bids were Nokia, Ericsson, Siemens, Motorola and ZTE Corp. Three of those were shortlisted for financial bids, with Motorola and ZTE not meeting criteria.