Nokia Siemens may be cut out of monster Indian deal

Nokia Siemens Networks’ share of one of the world’s biggest GSM contracts is in danger after the Finnish-German venture reportedly refused to budge on price.

Reports coming out of India today, indicate that Bharat Sanchar Nigam Ltd (BSNL), which is in the process of awarding a $2bn plus tender for around 22 million GSM lines, is losing its patience with the infrastructure firm.

Swedish kit vendor Ericsson has already been awarded 60 per cent of the contract after submitting the lowest bid. NSN (Nokia Siemens Networks) was due to receive the remaining 40 per cent but must meet Ericsson’s price in order to comply with the tender conditions.

Ericsson, which is suffering heavily from the impact of low margin network rollouts in developing markets, is understood to have quoted BSNL a price of $91 per line, while NSN is trying to stand its ground at $177 per line.

Rumour has it that if NSN fails to budge, Ericsson could be awarded the whole 22 million line deal. As NSN and BSNL have been in negotiations all week, an announcement is expected imminently.

This newest development is the latest in a catalogue of delays that has held up the Indian operator’s expansion in one of the world’s fastest growing mobile markets.

The initial tender was expected to be in the region of 60 million new GSM and 3G lines, amounting to a massive $5bn. But a change of management at BSNL reduced the scope of the award.

The merger of Nokia and Siemens’ infrastructure units also threw up delays as the company had to resubmit its offer as a single unit. Originally Ericsson, Nokia and Siemens were battling it out independently.

Then a Delhi High Court froze the contract award after Motorola claimed it had been unfairly eliminated from the tender.