The board of Bharat Sanchar Nigam Ltd has decided to buy only 14 million second generation mobile lines at an estimated per line cost of Rs 3,537, lower than the Rs 4,965 per line quoted by Ericsson, the lowest bidder for the full order of 45.5 million lines.
The whole order had included both 2G, the currently used technology, and third generation lines (used for high-speed mobile Internet access).
Another 3.5 million lines supporting 3G mobility will be bought only after the government finalises the spectrum policy for this yet-to-be launched service in the country.
With this, BSNL's bill for the equipment will stand at Rs 4,952 crore (Rs 49.52 billion), significantly lower than the original bid of Rs 22,595 crore (Rs 225.95 billion) quoted by Ericsson for 45.5 million lines.
In taking these decisions, the BSNL board has received approval from its legal counsel and the additional solicitor-general of India.
To get around the original tender condition that prevented it from changing the order after the bid to buy only 2G lines, BSNL will place an advance purchase order for 22.75 million lines (50 per cent of the tendered quantity) and subsequently issue the purchase order for 14 million 2G lines.
BSNL will also correspondingly reduce the value of the bank guarantees submitted by the vendors.
These decisions, taken by the BSNL board at a meeting in New Delhi on Monday, have been conveyed to Communications Minister A Raja, who is expected to take a final view in a day or two.
Given that the decision broadly concurs with the minister's wishes, it is likely to get his approval, after which the company can go ahead and place the order with Ericsson and Nokia.
The other contenders, USA's Motorola and China's ZTE, which had been disqualified from the earlier tender, may not be invited to re-bid.
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