Helpless in a wireless world
Before retiring on July 31, A.K. Sinha, Chairman & Managing Director, Bharat Sanchar Nigam Ltd (BSNL), would have wanted to leave his mark as the man who not only led the country's #2 wireless service but also as the man who had launched the country's first 3G services. Unfortunately, in the last month of his tenure, he saw his company slip to fourth position overall and to third position in the GSM segment with his corporation's growth stagnating over the last three months; what is more, BSNL's hopes of flagging off next-generation services in the near future have also hit a brick wall.
The only solace for Sinha in the last 15 days before his superannuation was that the government gave a go-ahead for a GSM capacity expansion and procurement of 3G equipment, which has been dragging for almost two years. In early July, Communications Minister A. Raja, after threatening to scrap the entire process, eventually slashed BSNL's GSM tender to half, at 23 million lines. This will provide the stagnating BSNL some scope to expand, but not before at least six months.
The original tender was valued at Rs 20,000 crore, and for 45.5 million lines. BSNL could not place the orders last year as the US telecom vendor Motorola challenged the tender process over its disqualification. But although Motorola decided to withdraw the petition Raja, who took over from Dayanidhi Maran in May, called for certain changes in the tender. He questioned the disqualification of Motorola and wanted BSNL to negotiate the prices with the vendors to bring them down to less than $90 a line from the $107 quoted by the lowest bidder Ericsson.
"There was always a confusion," explains Sinha. "Our committee works on the tender process and then eventually recommends a price. Just because $107 was quoted in the tender it does not mean that the same price would be applicable. Of course, two bidders (Ericsson and Nokia-Siemens) had qualified in the process and the prices were eventually negotiated. The price now works out to around $90."
The controversy has taken a toll on BSNL, with Vodafone-Hutch capturing its #2 slot. Between April and June, Vodafone-Hutch added more than 3 million lines; BSNL, due to a paucity of available connections, could only manage about 0.6 million connections. Meantime, the Joint Forum of BSNL and MTNL unions, comprising more than 3.5 lakh employees, has threatened to agitate. "The executives and non-executives will take direct action if the government and management do not issue immediate necessary orders for the 4.5 million GSM lines." Says G.L. Jogi, General Secretary, Sanchar Nigam Executives' Association: "The delay has caused a notional loss of about Rs 55 crore a month to BSNL; the losses will increase over another eight months," says Jogi. "Even if the order is placed immediately it will take at least 10 months for BSNL to get hold of the equipment and roll out the lines."
The opposing party at the Centre, the BJP, for its part has demanded a CBI probe. According to BJP spokesperson Prakash Javdekar: "The nation has a right to know why BSNL approved a much higher rate of $107 for a GSM connection in a tender amounting to Rs 20,000 crore than the rate of $69 that was offered for a similar connection to MTNL recently." The Opposition plans to raise the issue during the monsoon session of Parliament next month.
Interestingly, now that the board which was designated to look into the queries raised by the Minister has given the entire process a clean chit, the employees want to know the reason for reducing the size of the tender. Even the move to delay and reduce the 3G equipment procurement without valid reason has invited the employees' wrath.
