BSNL’s Nokia tender disqualification upheld

On 26 Aug 2009, 0041 hrs IST, Joji Thomas Philip, ET Bureau at http://economictimes.indiatimes.com/BSNLs-Nokia-tender-disqualification-upheld/articleshow/4934659.cms.

NEW DELHI: BSNL has overcome two major challenges in its attempt to award the world’s largest telecom contract, clearing the way for it to open price negotiations with the two companies it has shortlisted for the deal.

An ‘integrity panel’ set up with the permission of the country’s top anti-corruption body, the Central Vigilance Commission, has endorsed the state-run company’s decision to disqualify, on technical grounds, Nokia Siemens Networks from its Rs 35,000-crore tender to supply equipment for 93 million mobile phone  connections.

The Andhra Pradesh High Court, too, ruled on Monday that BSNL was justified in disqualifying NSN because it did not meet the technical requirements.

“We are glad both the integrity panel as well as the courts have cleared us of any wrong doing given the fact that there were allegations that we were not transparent with the selection process,” a top BSNL executive said. BSNL, the executive added, will immediately start price negotiations with China’s Huawei and Swedish company Ericsson. “The only possibility of this tender being further delayed is if NSN were to approach the Supreme Court.”

BSNL has been making huge operating losses in the past two years, only managing to stay in the black because of interest income from its accumulated cash reserves. It ran out of capacity to expand cellular services nearly 18 months ago and no new major contracts for mobile networks and equipment have been awarded in the past 24 months.

NSN said it has obtained the report of the integrity panel — whose members are former chief election commissioners TS Krishnamurthy and BB Tandon — and is “internally reviewing the contents.” A company official added that it has still not received the order of the AP High Court.

The panel was set up after NSN approached the anti-corruption body seeking a probe into its disqualification. It also filed petitions in the Delhi and Chandigarh High Courts as well as the AP High Court. While the Delhi High Court said the case did not fall under its jurisdiction, the Chandigarh High Court asked BSNL to get NSN’s bid evaluated by an independent panel. The AP High Court had in May asked BSNL to put on hold the tendering process until it took a decision.

In May, a year after the tender was floated, Ericsson was short-listed as the lowest bidder for the northern and eastern regions, while Huawei made the cut for the western, eastern and southern zones. NSN has argued before the courts that it was not given proper reasons for its disqualification and claimed all details that BSNL wanted were provided.

On the other hand, BSNL has maintained that all the four companies which were disqualified — NSN, China’s ZTE, Alcatel-Lucent and Nortel — were purely because of technical reasons.

BSNL executives have told ET that they suspect ‘vested interests’ are behind the legal challenges to delay its tender and stymie the state-run company’s expansion. They cited a similar petition in Delhi High Court in 2006 by Motorola, which delayed BSNL’s expansion plans by about a year. Motorola later withdrew the case. BSNL’s last tender in 2006 for about 43 million lines, then the largest, was finally reduced to 13 million lines after telecoms minister A Raja’s intervention.

The umbrella body representing all employee unions of BSNL has asked the telco’s management to act against NSN for delaying BSNL’s expansion plans.

NSN denies any such motive and says it has “long-standing relationship with BSNL” and “look(s) forward to supporting them in the future as well”.

DoT proposes tax breaks for 3G winners

26 Aug 2009, 0044 hrs IST, Kalyan Parbat & Joji Thomas Philip, ET Bureau at http://economictimes.indiatimes.com/DoT-proposes-tax-breaks-for-3G-winners/articleshow/4934677.cms.

KOLKATA: The Department of Telecommunications (DoT) will ask the empowered group of ministers (EGoM) on 3G-spectrum auction, headed by Finance minister Pranab Mukherjee, to consider a proposal under which successful bidders of pan-India 3G spectrum can enjoy tax benefits applicable under section 80-1A of the Income Tax Act.

The DoT’s rationale is that the 3G mobile broadband should be treated as a distinct infrastructure service and not continuity of telecom operations, especially in case of 2G service providers pitching for a pan-India 3G licence. The DoT will place the proposal during the second meeting of the EGoM scheduled for Thursday.

The proposal for tax benefits applicable under section 80-1A of the Income Tax Act is part of an internal note prepared by DoT that will be circulated to EGoM members, a senior DoT official told ET.

Currently, only telecom companies that kicked off operations between April 1, 1995 and March 31, 2000 enjoy income tax breaks under section 80-1A. If the EGoM were to accept the DoT proposal, it would imply that 3G operations of telecom companies will enjoy income tax breaks on 100% of their profits for initial five years. In the next five years, these telcos will enjoy a 30% tax break on their profits.

The DoT note to the EGoM also adds that Indian Space Research Organisation (ISRO) is of the view that it cannot spare any further airwaves for WiMax services. As reported by ET earlier this month, ISRO chief G Madhavan Nair had said that the Department of Space (DoS) has already parted with 40 MHz of airwaves for WiMax services in the 2.5 GHz band.

He said any interference from the WiMax services offered in this band in the future could “severely affect the very sensitive satellite services in the adjacent band”. Mr Nair had also added the DoS is now left with only 150 MHz of airwaves in the 2.5 GHz band, the bare minimum requirement for satellite services.

The DoT note to the EGoM was prepared by its joint secretary (T) and consists of demands from the industry, especially those of CDMA-based operators, and includes the views of the DoS on WiMax spectrum.

The EGoM is slated to settle all outstanding issues associated with the auction of 3G airwaves, vital for high-end services such as high-speed internet and video conferencing on mobiles.

It will take a final call on the reserve price for 3G and WiMAX spectrums and decide on the number of players to be allowed to offer these high-end services in each circle.

It is also learnt that the EGoM may also debate whether the government at all has the right to urge successful bidders of 3G spectrum to shell out an extra Rs 1,600 crore-plus for a separate pan-India UAS licence, especially when DoT knows only too well that there is no extra 4.4 MHz 2G spectrum available to bundle with new licences.

“At a time when the DoT’s wireless planning cell is well aware that it won’t be able to meet future 2G spectrum obligation for new UASL licencees, why should they be asked to shell out an extra Rs 1,600 crore plus full complement of the licence fees. While nothing has been finalised yet, a successful bidder of 3G spectrum, alternately, may also be asked to shell out a lower sum for a pure vanilla UASL without the bundled spectrum,” said a government official familiar with the matter.

Indications are that a section of E-GoM members are loathe to the idea of fixing the number of slots for 3G services to a maximum five (including BSNL) per service area. “Considering that, there are as many 11 to 9 slots available in some circles like Orissa and Madhya Pradesh, the E-GoM is likely to debate the rationale of uniformly restricting the number of slots (per circle) for delivery of 3G services. There is a feeling in the finance ministry that such restriction can tantamount to a loss of potential revenue for the government,” said a DoT official close to the developments.

July 2009: 14.38M Mobile Connections Added In India; Landlines Sink; Broadband At 6.8M

From http://www.medianama.com/2009/08/223-july-2009-1438m-mobile-connections-added-in-india-landlines-sink-broadband-at-68m/ on August 24, 2009

By Preethi J

News of the reviving economy is reflected in the telecom sector in the month of July, which saw an addition of 14.38 million wireless connections compared to the 12.03 million in June, 2009. The total number of telephone connections in the country was 479.07 million at the end of July 2009.

• Teledensity rose from 39.86% in June to 41.08%.
• Wireless teledensity is up from 36.64% to 37.87%
• Total wireless connections rose 3.6% to 441.66 million
• Broadband connections swelled from 6.62 million in June 2009 to 6.8 million.

BSNL Loses 0.16M Landline Users; Bharti Adds 33,940

This segment continues to see churn with BSNL’s customers choosing the wireless route and disconnecting their landlines – the two oldest landline providers BSNL and MTNL lost a total of 0.17 million subscribers in July after losing 0.19 million in June 2009. MTNL lost 8181 to reach 3.54 million connections. BSNL lost 166,519 landline connections and now has 28.62 million; it accounts for 76.5% of the country’s landline userbase and will continue to be hit by negative growth even as private service providers such as Bharti Airtel and RCOM add users by bundling the landlines with other necessary services such as broadband and IPTV.

• Total landline connections in India – 37.41 million
• Wireline teledensity has reduced marginally to 3.21%

Downloads: TRAI Data (PDF)

Other operators offering landlines and their user base:

• Bharti Airtel – 2.86 million
• Reliance Communications – 1.13 million
• Tata Teleservices (Indicom) – 967,554
• HFCL Infotel – 163,399
• Sistema Shyam (MTS) – 111,069

Deutsche Telekom Eyes Indian ISP Space; Devas Multimedia Looks To Raise Funds

From http://www.medianama.com/2009/08/223-deutsche-telekom-eyes-indian-isp-space-devas-multimedia-looks-to-raise-funds/ on August 24, 2009

By Preethi J

German telecom conglomerate Deutsche Telekom, which owns T-Mobile in USA, is planning to join the Internet Service Provider arena in India. According to a MarketWatch report, the telco is planning to set up a high-capacity radio network for quick Internet connections in metropolitan areas of India come next year.

I wonder if we need yet another ISP in India, with already a number of incumbent players – Reliance, Tata Indicom, MTNL, BSNL, Hathaway, Tikona, Sify and Bharti Airtel, and France Telecom, Vodafone and DEN Networks also planning ISPs. With the last mile still closed, wireless is being seen as the way to go; which is where Devas Multimedia comes in.

Devas MultiMedia:Looking To Raise Funds

Deutsche Telekom received permission from India’s Foreign Investment Promotion Board (FIPB) last year to invest Rs. 317.85 crore into Devas Multimedia, a little known Bangalore-based wireless services company, which was working on a long term Mobile TV (DMB) project with Indian Space Research Organisation (ISRO). DT has acquired 17% stake in Devas.

Interestingly enough, Devas is looking to raise funds. The company, which already has Telecom Ventures and Columbia Capital as investors, apart from Deutsche Telekom, has a proposal pending with the FIPB for permission to “induct fresh foreign equity participation with the induction of a new foreign collaborator.”

Devas is a curious case: little is known about it, and it still appears to be in stealth mode:  there’s no website and there is little information on it except of it’s work with ISRO and its backers.

India desperately needs a catalyst to boost Internet penetration: Internet growth in July 2009 in India has actually fallen to 2.7% from 3.4% in June and 6.3% in May 2009. Besides the well known issues of delinking last mile access and ISP licensing which are throttling growth, other issues Deutsche Telekom will need to grapple with are low PC adoption and lack of Indic language content.

Companies Eying ISP Space In India

Earlier this year, France Telecom also entered India through Equant Network Services, its joint venture with Emery Technologies with the intention of launching Internet services;  Vodafone too announced its entry. The latest to announce plans of becoming an Internet service provider is DEN Networks, a cable TV company which is planning to go public to raise funds.

The Wireline Alternative: Broadband Over Power

Research and experiments on Broadband over Power Lines have been on for years – news about it pops up every few months. Indian Express has the latest: about Bengal Engineering and Science University professors and CESC have implemented Broadband over Power in two housing estates in Kolkata. The copper wires that supply electricity to double as broadband connections and installing a customer premise equipment that decodes the signals and brings them to your computer. But if it’s that simple, why is it taking so long to materialise? The government recently deferred an application by Powermax Communications, a provider of power transmission  and distribution management systems and broadband over power services, to increase foreign equity participation.

US company gets BSNL WiMax deal

The Hindu Business Line of August 14, 2009 at http://www.thehindubusinessline.com/2009/08/15/stories/2009081551000401.htm

Bharat Sanchar Nigam Ltd has awarded a contract to US-based equipment manufacturer Harris Stratex for supplying WiMax base stations in Kerala. BSNL said the contract was not based on a franchisee model but on outright purchase of equipment. This is part of BSNL’s urban WiMax project to roll out wireless broadband services. The contract was bagged by Telsima, which was recently acquired by Harris Stratex. The US-based firm has partnered Indian turnkey solutions provider ICOMM for implementing the project. The PSU had earlier given a similar contract to Huawei for supplying gear in Punjab. – Our Bureau

BSNL to set up 6 WiMax stations in Orissa – CIOL News Reports

via BSNL to set up 6 WiMax stations in Orissa – CIOL News Reports, http://www.ciol.com on Thursday, June 18, 2009

KOLKATA, INDIA: Aiming rural India, Bharat Sanchar Nigam Limited (BSNL) has decided to set up six Wi-Max (wireless broadband) stations in its Berhampur telecom district (BTD), which covers Ganjam and Gajapati districts in south Orissa.

B K Nayak, general manager, BSNL’s Berhampur telecom district, said: “The equipment has already been provided for installation of the Wi-Max stations and the stations are expected to be operational during the current year.”

Related stories at

• http://www.business-standard.com/india/news/bsnl-to-setsix-wi-max-stations-in-ganjam-gajapati/361342/

Excerpt from above

While as many as 3176 broadband connections have been provided in the Berhampur telecom district so far 7,500 more connections are to be provided during 2009-10.

The telecom district has also planned to introduce EVDO (evolution data only) System or wireless data cards in Berhampur, Chhatrapur and Paralakhemundi, the district headquarter town of Gajapati district during the current year.

The EVDO service has already been commenced at Golanthara in Ganjam district in March this year. This service was introduced in Golanthara on the outskirts of Berhampur as a number of technical institutes are located there and the service was needed for the benefit of the students, said Nayak.

He said that BSNL would provide 80,000 new mobile connections in the Berhampur telecom circle in 2009-10.

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BSNL to outsource customer-care to BPOs

Thomas K Thomas on The Hindu Business Line on June 18, 2009

New Delhi, June 17 To ramp up its customer service capabilities, state-owned Bharat Sanchar Nigam Ltd is scouting for private call centre units that can operate contact centres for addressing complaints from fixed line and broadband subscribers across the country.

BSNL has invited expression of interest from private players for setting up the contact centres.

According to the expression of interest floated by the company, the private player will set up, operate and maintain the contact centres, including agents at their own premises. The agents will be required to handle queries from customers and provide solutions. This will also include obtaining customer feedback.

Initially, the contract will be for three years and will be extendable for the next two years on year-to-year basis at the discretion of BSNL. The PSU may expand the scope of work to include BSNL’s other services apart from landline and broadband services.

Eligibility

Only companies with experience in operation of contact centres in India for the last two consecutive years with minimum of 1,000 operational seats deployed for domestic clients and with at least 500 operational seats at a single location are eligible to bid for the contract.

The call centre company should also have experience in servicing a telecom service provider operating in more than three States. The company should have at least four contact centres/call centres in India at different geographical locations for the last one year.

Outsourcing route

BSNL is increasingly outsourcing its operations to private players. To save on capital expenditure and roll out services faster, BSNL is taking the outsourcing route in a big way for new projects.

The PSU has invited bids from private players for at least five of its projects including offering WiMax services, Internet Protocol Television and setting up Internet Data Services. It recently sought expression of interest from large retail chains to sell BSNL products and services. The trend is in line with what private telecom operators are doing. Majors such as Bharti Airtel have outsourced most of their operations to third party vendors.

DoT seeks Rs 3000 cr support for BSNL- Telecom-News By Industry-News-The Economic Times

17 Jun 2009, 0302 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The communications ministry has sought an allotment of Rs 3,000 crore from the finance ministry for supporting BSNL’s wireline networks that were set up before April 2002. The DoT wants the amount to be sanctioned in the budget.

This is to compensate the state-owned telco for losses during the last fiscal after telecom regulator Trai had done away with access deficit charge regime from April 1, 2008. Prior to that, all telcos were paying 0.75% of total revenues towards ADC, which was used to support BSNL’s unviable fixedline operations in rural India. In 2007-08, BSNL got Rs 2,000 crore as ADC.

But, when hanging up on ADC, the regulator in a bid to address the concerns of BSNL , which had warned that it would be forced to discontinue all its rural fixed-line operations if the levy were to go, recommended that the government give it a subsidy of Rs 2,000 crore per annum for the next three years from the Universal Obligation Fund (USOF).

All telcos pay 5% of total revenues towards the USOF, which is dedicated to improving communication facilities in rural India. Unutilised amount in the USOF is at over Rs 20,000 crore. In March 2009, BSNL and DoT had signed an MoU to provide the state-owned operator a subsidy of Rs 6,000 core over the next three years from this fund to sustain its rural operations.

In fact, BSNL had even dragged the regulator to the telecom tribunal, but the latter refused to issue a stay on the matter. Trai had however, justified its move to do away with the ADC regime on the grounds that the total support provided to BSNL over the last couple of years under various initiatives which includes reimbursement of licence fee and spectrum charges, moratorium on payment of interest, support from Universal Service Obligation Fund(USOF), ADC funding and exemption on entry fee was about $8 billion (Rs 31,500 crore), while adding that the PSU cannot be supported in perpetuity.

In a bid to give further relief to BSNL, last year, DoT also exempted telcos from paying licence fee on fixedline telephony from licence fee enabling the state-owned operator to save Rs 1,200 crore annually.

via DoT seeks Rs 3000 cr support for BSNL- Telecom-News By Industry-News-The Economic Times.

Revenue, not user base, to set telecom pecking order

17 Jun 2009, 0305 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Subscriber numbers in India’s wireless story are losing their relevance today as far as determining the industry position of a service provider is concerned. t will be revenues and not subscriber numbers that could decide the pecking order in the world’s fastest-growing telecom market.

This is reflected in the latest revenue figures released by the industry regulator, Trai. Going by this, the top three operators in India are Bharti Airtel, Vodafone Essar and Bharat Sanchar Nigam (BSNL).

Airtel’s adjusted gross revenue (AGR) from wireless and wireline operations was Rs 7,998 crore for the March quarter. Vodafone Essar, which offers only mobile services, had revenues of Rs 4,456 crore during January-March 2009 on a subscriber base of 68.7 million. Reliance Communications (RCOM), which has the second largest customer base, reported an AGR of only Rs 2,998 crore on 72.6 million users during the quarter, making it the fourth largest in terms of revenues.

The revenues for the state-owned BSNL stood at Rs 3,943 crore making it the third largest. BSNL offers mobile services on GSM apart from fixed line services. Besides showing the revenue capabilities of an operator, AGR is significant, as it is the basis on which service providers pay licence fee and spectrum charges. Operators pay a revenue share licence fee to the government ranging from 6% to 10% of their AGR. Increasingly, operators are targeting revenue growth instead of a larger user base.

According to Bharti Airtel’s vision statement, the company’s aim is 20% increase in revenue margin per subscriber in the next few years.

Analysts contend that with more and more low-end users signing up for services, it is becoming difficult for operators to maintain margins and improve ARPUs (average revenue per user per month). In such a scenario, those who continue to grow revenues along with subscriber base will be the clear winners.

“As the new subscriber base is primarily drawn from tier III towns and rural markets, the incremental subscriber addition is not leading to a commensurate revenue upside for telcos. The catchphrase to evaluate a telco’s performance will be quality of subscribers rather than the number of new subscribers,” Acsendia Consulting principal analyst, Alok Shende told ET.

A smaller player like Idea Cellular, which operates in 13 circles, had AGR of Rs 2,389 crore on a subscriber base of 39 million. This is just about Rs 600 crore less than RCOM on a base which is almost half of that company.

KPMG director (telecom) Romal Shetty said, “Initially, everyone was going after subscriber numbers. Now, they are looking at quality of subscribers. This explains the emphasis on value added services (VAS), which bring in higher revenues.” He pointed out that low-end pre-paid users are now bringing in monthly revenues of as low as Rs 70 per month.

Tata Teleservices reported revenues of Rs 1,889 crore during the quarter placing it at sixth followed by state-owned Mahanagar Telephone Nigam (MTNL). Aircel, a relatively new entrant, is at the eight position, which had AGR of Rs 721 crore during the quarter.

Nokia Tops List of India’s Most Trusted Brands – BusinessWeek

From Economic Times of India June 17, 2009, 9:50AM EST

via Nokia Tops List of India’s Most Trusted Brands – BusinessWeek.

Nokia’s tagline of ‘connecting people’ certainly seems to have struck a chord with the Indian consumer. For a second year running, the handset maker has topped the prestigious, ‘Brand Equity Most Trusted Brands (MTB) Survey’. In second and third places are the two venerable consumer brands, Colgate, a four-time winner, and Lux, respectively.

The survey was unveiled last night at a glittering ceremony, which saw the who’s who of India’s brandsphere making their way to Mumbai from all parts of the country to be in attendance. The marque names included HUL MD Nitin Paranjpe, Nokia MD D Shivakumar, P&G MD Shantanu Khosla, Britannia MD Vinita Bali, BCG India MD Janmejaya Sinha, JWT CEO Colvyn Harris, Madison chairman Sam Balsara, Ogilvy India executive chairman & NCD Piyush Pandey and McCann Erickson India executive chairman Prasoon Joshi.

A clear indication that today the Brand Equity MTB Survey is the one study that marketers put their faith in. In this, the sixth year of the MTB survey, there are two new entrants into the top 10. Coming in at No. 6 is one of the oldest brands in India, Horlicks.

The brand, which has perennially been in the top 20, has finally managed to leapfrog into the coveted top 10. However, it is Reliance Mobile which is the star of this year’s edition, considering that it had failed to crack the top 20 in 2008. Telecom, as a category, is clearly on the ascendant. Airtel, BSNL and Vodafone have all surged up the charts to finish in the top 30, ranking 12, 19 and 30, respectively.

Hindustan Unilever, as has always been the case, continues to dominate the overall rankings with three brands (Lifebuoy, Lux and Pepsodent) in the top 10 and seven in the top 20. However, Pond’s, a brand from the HUL stable, also happens to be the biggest loser in the top 10, falling from No. 5 last year to No. 16 this year.

In the listing of the top 50 service brands, three out of the five brands are public sector brands namely SBI (13), LIC (17) and BSNL (19), perhaps an indication that public sector brands are perfectly capable of holding their own against their private counterparts.

The Brand Equity MTB survey is the largest, most diverse and most prestigious survey of its kind, with over 8,000 respondents nation-wide and is conducted by The Nielsen Company on behalf of Brand Equity. The detailed survey findings are available in today’s 12-page special edition of Brand Equity.

Also, watch out for all the action from the launch party and interviews with winners and India’s premier marketers on ET NOW, the soon-to-be launched cutting-edge channel for business news.

Vodafone approaches FIPB for NLD, ISP licences

From http://www.economictimes.com on June 16, 2009

NEW DELHI: Mobile services company Vodafone Essar has applied for Internet Service Provider

and national long distance licence and has approached the Foreign Investment Promotion Board (FIPB) for approval.

The company officials confirmed that the operator has applied for these two licences and aims to become a full-fledged communication service provider

in the country.

FIPB, on June 19, may take up the proposal, sources said. If Vodafone Essar, in which the UK-based mobile firm Vodafone holds majority stake, gets the national long distance licence (NLD) it will help the company save operating expenses for carrying STD traffic, instead of hiring other mobile company’s network for the purpose.

All the top mobile operators like Reliance Communications, Bharti, BSNL and MTNL have their own NLD infrastructure.

The company is also planning to enter the internet service segment in which all other major mobile operators like BSNL, Reliance Communications and MTNL has a presence.

BSNL opts for franchisee route to reduce costs

Thomas K Thomas on The Hindu Business Line on June 16, 2009

New Delhi, June 15 In a bid to save on capital expenditure and to roll out services faster, Bharat Sanchar Nigam Ltd is taking the franchisee route in a big way for new projects.

The PSU has invited bids from private players for at least five of its projects, including for offering WiMax services, Internet Protocol Television (IPTV) and setting up Internet Data Services.

According to BSNL officials, the company may be saving more than Rs 10,000 crore of capital investment by adopting the franchisee model. Take for example the controversial WiMax project wherein the company is planning to allow a private player in each circle to utilise its spectrum and back haul infrastructure to offer high-speed broadband on a revenue share basis. The franchisee will make all the investments required to set up the network and also undertake marketing and sales on behalf of BSNL. It is following a similar business model for IPTV services.

Risks minimised

According to BSNL officials, this model also minimises risks for the state-owned company especially in areas where the technology or the service being offered is relatively new and untested.

“While we are offering our traditional businesses like mobile ,fixed line and long distance telephony on our own we are seeking private participation for new services like IPTV and WiMax-based services where we are yet to see an uptake in demand across the world. In the franchisee model, we let private entrepreneurs take the risk,” said a BSNL official.

Most of the deals being worked out by BSNL include transfer of business operation to the PSU after a certain period of time which means that if the service does succeed then BSNL gets to run the show at a later date.

BSNL is also now slowly beginning to use private players in marketing and sales activities. It has recently sought expression of interest from large retail chains to sell BSNL products and services over their counters.

Private operators

The trend is in line with what private telecom operators are doing. Most big players such as Bharti Airtel have outsourced most of their operations to third party vendors. While BSNL being a Government-run company cannot outsource its operations to a private player, it is using the franchisee model to create efficiency in its operations.

BSNL officials said that depending on the successes of these projects which have been launched the PSU will evaluate further opportunities to partner private players on a franchisee model.

BSNL’s GSM project faces further delay

Thomas K Thomas on The Hindu Business Line on June 15, 2009

New Delhi, June 15 Finnish telecom equipment-maker Nokia Siemens Networks (NSN) has shot off a fresh letter to Bharat Sanchar Nigam Ltd’s two-member integrity panel alleging that it has been unfairly singled out of the bidding process for the Rs 30,000- crore GSM project.

NSN has alleged some of the other bidders had also not produced certificates required to be eligible for the tender.

The panel is investigating whether the tendering process was transparent or not. BSNL will not award the contracts till the investigations are complete.

Experience certificate

The Punjab and Haryana High Court had directed BSNL to give the reasons in writing. According to BSNL sources, NSN had not submitted an experience certificate for the North zone. However, NSN countered it on the ground that the certificate submitted for other zones was relevant for the North zone as well. NSN said in its letter that if BSNL had to disqualify its bid, then the PSU should have also rejected Ericsson’s bid since the latter had allegedly not given a separate certificate for 2G equipment, though BSNL had floated different tenders for 2G and 3G equipment.

BSNL had referred the dispute to an integrity panel approved by the Central Vigilance Commissioner after NSN took its case to the CVC seeking intervention. Two former Chief Election Commissioners — Mr T.S. Krishnamurthy and Mr B.B. Tandon — are the members on this panel. Ericsson and Huawei were short-listed by BSNL, which had rejected offers from NSN, Alcatel Lucent and ZTE.

BSNL drops plan to bid for Tunisia license

14 Jun 2009, 1159 hrs IST, PTI on www.economictimes.com

NEW DELHI: BSNL has dropped its plans to bid for telecom licence in Tunisia as the PSU finds the returns not enough to enter that market through bidding of licence.

“We did not bid for Tunisia… we did not find returns on our investment,” a senior BSNL official said.

Earlier the PSU’s CMD Kuldeep Goyal had said BSNL was planning to bid for telecom licence in Tunisia and get a footprint in the African market, which has immense potential.

But not bidding for Tunisia does not mean BSNL has lost sight of the potential of the African region, which it says has growing mobile usage.

BSNL official said the minimum bid price was understood to be $10 million but the Tunisian market is well- penetrated with 80 per cent of the population owing mobile phones leaving not much scope for more penetration.

BSNL has shortlisted eight consultants, including Ernst & Young, McKinsey, KPMG and PriceWaterHouseCoopers, for its plans of mergers and acquisitions, strategic partnerships and overseas forays.

The state-run firm, which so far concentrated only on the Indian market (except Delhi and Mumbai), has decided to expand overseas. Sources said BSNL has a cash surplus of over $10 billion and would use part of these resources for its overseas foray.

After being denied entry to Delhi and Mumbai, BSNL was finally granted permission by the government to venture outside the country through acquisitions, JVs and licence buys to expand.

BSNL has already set up a separate international business division to explore telecom opportunities abroad.

Last year, Bharti Airtel and Reliance Communications entered into negotiations with the South Africa-based telecom giant MTN to expand in the African continent, but the talks failed. Bharti again has revived talks with MTN for a cash- cum-stock acquisition.

Earlier this year, Tata Communications announced plans to expand its operations in Africa through acquisitions, joint ventures, and new projects, and in January increased its stake in South African fixed-line operator Neotel to 56 per cent.

BSNL’s sister concern MTNL has already forayed into Nepal and Mauritius. Analysts said BSNL may be exploring the possibilities of bidding for mobile licences in Egypt, Rwanda, Malawi, Turkey and Iran. All these countries will open bids for licence auction within the next couple of months.

BSNL to invest Rs 15,000 cr in FY10

Virendra Singh Rawat / Lucknow June 11, 2009, 0:56 IST on The Business Standard

Public sector telecom giant Bharat Sanchar Nigam Limited (BSNL) will invest Rs 15,000 crore this fiscal to upgrade its infrastructure and roll out new value-added services.

“Our capital expenditure in different verticals this year would be around Rs 15,000 crore,” BSNL CMD Kuldeep Goyal told Business Standard.

BSNL will use the investment for mobile expansion and for services like 3G, broadband, wireless broadband, IPTV, WiMAX, mobile commerce (m-commerce), value-added landline, Enterprise Resource Planning (ERP) and others.

“Our aim is to add 35 million telephone lines by the end of this fiscal across the country and to commission fresh 3G network,” he added.

BSNL had launched 3G services on February 2 and, at present, it is available in 70 towns. “We plan to provide 3G services in 700 cities by the end of calendar 2009,” Goyal said.

He added that, for achieving the targeted mobile growth, more spectrum was needed by operators.

“The availability of spectrum for mobile phone operators in general is less than other countries. However, this has not affected the quality of services being offered,” he claimed.

“We will offer wireless broadband through WiMAX technology in 1,000 blocks of the country out of the total 6,000 blocks. The state-run telecom operator will roll out franchisee-based WiMAX service in the country, starting with Gujarat, Maharashtra and Andhra Pradesh.

“We have floated tenders for offering similar a WiMAX service in other states as well,” he said. “We are also working on improving our quality of service and have engaged AC Nielson to test the quality of our mobile service,” Goyal added.

PwC, E&Y among 8 shortlisted consultants by BSNL

11 Jun 2009, 1931 hrs IST, PTI on www.economictimes.com

NEW DELHI: State-run BSNL has shortlisted eight consultants, including Ernst & Young, McKinsey, KPMG and PriceWaterHouseCoopers, for its plans of mergers and acquisition, strategic partnerships and overseas forays.

A BSNL official told PTI it has also empaneled British Tele Consults, Value Partners, PRPM Consults and Diamond Management and Technology Consultants.

The official said PwC has furnished a certificate to BSNL saying it has not been barred to deal with any PSU and BSNL, if found later so, it can terminate the services of PwC.

These consultants will have to enter into an agreement with BSNL by tomorrow. Each time BSNL undertakes an overseas initiative, these eight firms will be asked to quote their commission price and the the lowest bider will be selected for that particular job, the official said.

The official said the PSU is looking at Africa as an area of focus as it is an emerging region and also culturally, financially, African countries suits more to India firms.

The state-run firm, which so far concentrated only on the Indian market (except Delhi and Mumbai), has decided to expand overseas. Sources said BSNL has a cash surplus of over 10 billion dollars and would use part of these resources for its overseas foray.

BSNL staff unions ask telco to act against Nokia Siemens

9 Jun 2009, 0208 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The umbrella body representing all employee unions of BSNL, the country’s largest telco by revenues, on Monday asked the telco’s management to act against global networks major Nokia Siemens Networks (NSN) for ‘delaying BSNL’s expansion plans’.

This comes as Nokia Siemens had gone to courts challenging BSNL’s decision to disqualify the company’s bid for 93 million GSM lines on technical grounds. NSN had first approached the Delhi High Court seeking a stay on BSNL network contracts worth $6 billion that were awarded to Sweden’s Ericsson and China’s Huawei, but its petition was dismissed on grounds of jurisdiction. Following this, NSN had approached the regional high courts in Chandigarh and Hyderabad.

Responding to NSN’s petition, the Andhra Pradesh High Court ordered status quo on the tendering process in the south zone – the court also asked BSNL not to proceed with finalisation of the tender for the south zone until further orders.

“We have told BSNL management that the company should take action against such vendors that hold up BSNL’s expansion plans. These vendors never go to court when private operators reject their equipment. BSNL already faces a severe capacity crunch and any further delay in awarding the contracts will lead to the company not being able to compete with private operators,” the secretary general of the BSNL employee unions, VAN Namboodiri told ET.

The employee unions, in a communication to the BSNL management, also pointed out that while the government and security agencies had raised objections to BSNL awarding contracts to Chinese equipment major Huawei, similar concerns were not raised when private telcos purchased equipment from the Chinese vendors.

“We have no doubt that this (NSN going to courts and government raising objections to Huawei) is a conspiracy between the private telcos and private suppliers, as also certain forces within the government to weaken and reduce BSNL and privatise it gradually so that there will no public sector to compete with the private sector, which will enable them to increase the charges without any restraint and control,” the employee unions added in their communication to the government.

Highlighting a conspiracy angle, Mr VAN Namboodiri added that Motorola had filed a similar petition in the Delhi High Court in 2006, which delayed BSNL’s expansion plans by about a year, ‘during which period BSNL lost its first position in total connections and came down to fourth position in mobile services’. Motorola later withdrew the case.

Nokia Siemens on its part maintains that BSNL had disqualified the telco without providing any reasons. NSN in its earlier communication to the Central Vigilance Commission (CVC) pointed out that it had furnished all clarifications, details and explanations, along with additional customer reference certificates as desired by BSNL and was therefore confident of meeting all the technical requirements.

“We are fully confident that we meet the requirements as desired by BSNL. Even if the BSNL evaluation team feels that there are any shortcomings in our furnished responses, we should be given an additional chance for submission/explanation,” NSN had told the CVC. NSN has also added that since only a single bidder has been short listed for each of the four zones, BSNL would ‘be deprived the benefits of competitive bidding’.

Similarly, in the Delhi High Court, NSN had alleged that BSNL shortlisted Huawei despite security concerns regarding it being a Chinese company. But BSNL executives maintained that they had opened the bids only after getting security clearance to award telecom equipment contract to Huawei. Last month, security agencies had allowed BSNL to give contracts to Huawei only in the southern states as this region does not share sensitive borders with Pakistan, China and Bangladesh.

BSNL to seek foreign tie-ups to revive manufacturing units

6 Jun 2009, 0052 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: BSNL will seek foreign collaboration to revive its six telecom equipment manufacturing units spread across three cities — Mumbai, Kolkata and Jabalpur. The telco will soon invite expression of interest (EoIs)

 from global players to form JVs to manufacture mobile equipment. The JVs may include a technology transfer clause and may also stipulate that the foreign partner can invest in new machinery, according to BSNL executives familiar with the development.

The PSU may also mandate that bidders should be full-fledged players with expertise in design, development, manufacturing, supplying and marketing of telecom-related equipment for at least three years, the sources added.

“Currently, we make very little equipments. We are looking at collaborations with equipment companies for these factories. We can make mobile-related equipment and broadband products, such as modems,” BSNL chairman and managing director Kuldeep Goyal told ET. BSNL is the only service provider that runs manufacturing facilities also, but its factories are in a state of disarray as it lacks technology to compete with global hardware majors.

BSNL had tried a similar experiment in late 2006, when it selected Chinese equipment major ZTE to set up a 50:50 JV to revive its Kolkata plant. The PSU had shortlisted Chinese majors ZTE and Huawei, but the latter lost out in the final selection process. Despite talks between BSNL and ZTE reaching the final stages with both the companies deciding to manufacture a million CDMA mobile handsets and an equal number of fixed wireless terminals.

BSNL looks for global OEMs to bid for WiMax operations

6 Jun 2009, 0056 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: State-owned BSNL on Friday issued fresh tenders to run its WiMax operations, even as it tightened the eligibility criteria and introduced a slew of additional safe-guards in the wake of the telco being forced to abort its previous tender in light of dubious operators making it to the final shortlist.

“We have issued fresh tenders for companies to run our WiMax services across 16 circles on a revenue share franchisee basis. This time around, only original equipment manufacturers (OEMs) and system integrators can bid. We are confident that shell or paper companies will not be eligible to bid,” BSNL’s chairman and managing director Kuldeep Goyal told ET.

According to Mr Goyal, the telco was looking at global OEMs, such as Ericsson and Cisco, to bid for its WiMax tenders. The logic: OEMs have the technical capabilities to launch and operate such networks especially since they manufacture the same. “We are also looking at system integrators, such as IT companies, to run the operations. All bidders must have a minimum turnover of Rs 100 crore each for the last two years,” Mr Goyal added. In fact, the tender documents will be issued only after proof of turnover is shown.

ET had first reported on June 3 that BSNL would seek fresh bids for franchisees across the country to roll out technology that allows users the wireless access to high-speed internet and other data applications over a large area. BSNL expects WiMax to generate multi-billion dollar revenues over the next 10 years.

The telco had cancelled the earlier tender after its own investigations revealed that five of the six shortlisted companies — WiExpert Communications, SV Telecom Systems, Digitelco Communications, Spectrus Communications and Technotial Infoways — were acting as ‘fronts’ for certain individuals. It was found that these companies shared the same corporate details, notaries, auditors and dates of incorporation, and even their last annual general body meeting was shown to be held on the same day. BSNL had also come under pressure from its labour unions to scrap the tender following reports of wide-scale corruption in the methodologies adopted to shortlist successful bidders.

Companies, which want to participate in the new tender, have been given a deadline till August 4, 2009, to submit their bids. A host of companies, which were mysteriously disqualified from the earlier tender, are expected to place fresh bids — these include Soma Networks, Cisco-backed Terracom, Unwire India and Welcomm Communications, which has a tie-up Huawei and Aricent.

BSNL already has a tie-up with US-headquartered Soma Networks, which runs WiMax services for the PSU in the circles of Gujarat, Maharashtra (including Goa) and Andhra Pradesh. The deal with Soma has also raised concerns considering that BSNL had appointed this franchisee without going through a bidding process.

Besides, the WiMax forum has also pointed out that Soma Networks was deploying mobile WiMax in FDD format, a technology standard that is not recognised by the forum globally.

WiMax services: BSNL invites bids afresh

Thomas K Thomas on The Hindu Business Line on June 6, 2009

New Delhi, June 5 Bharat Sanchar Nigam Ltd on Friday invited bids afresh from private players to roll out WiMax services on a franchisee basis.

The PSU floated a new tender after it scrapped the earlier one to rope in a strategic partner.

The earlier tender ran into rough weather after it was discovered that five of the six bidders shortlisted by the PSU existed only on paper. The five companies had identical corporate information including contact address, contact person, e-mail id, and lawyer.

BSNL’s technical committee had disqualified global companies including Cisco and Soma Networks even as it chose to keep the bids of the five firms.

Political parties, including the BJP, had alleged corruption at the highest level. The issue had also caught the attention of the Prime Minister’s Office.

Tender norms

BSNL has now invited bids in 16 circles giving another opportunity to the international companies. The tender documents will be available from June 12. The technical bids will be opened on August 4. Companies with a turnover of over Rs 100 crore for two consecutive financial years can apply. The franchisee company will have to invest in setting up the WiMax network. The company offering the highest revenue share to BSNL will be selected.

BSNL had earlier selected Soma Network on a pilot basis for Gujarat, Maharashtra and Andhra Pradesh. Therefore there will be no competitive bidding in these three circles. The PSU is also in the process of issuing another tender for buying 7000 WiMax base stations to set up community service centres in the rural areas.

Cost reduction

The State-owned company is increasingly adopting the franchisee model to reduce costs. It is already offering IPTV services with HFCL on revenue-sharing basis. The PSU has invited bids from private players to set up Internet Data Centres (IDC) in various parts of the country on a revenue share basis.

The centres are expected to be set up over the next six months after which the PSU will go after outsourcing contracts for services such as web hosting, co-location, data warehousing and Internet managed services.