With its Singapore-based supplier not delivering SIM cards on time, the state-owned Bharat Sanchar Nigam Ltd has supplied less than even a third of the cellular phone connections it had planned to.
While BSNL had planned 1.5 million cellular connections by the end of the year, its supplier, Sharon Global Systems, has delivered only 500,000 SIM cards so far.
BSNL had ordered 1.7 million SIM cards, in case there were complaints of cards being damaged.
BSNL officials claim that their turnkey suppliers -- Motorola, Lucent and Ericsson -- have now begun sourcing their SIM cards from other companies in order to make good the delay.
While most cellular operators like Airtel and Hutch offer 32K SIM cards because they have more memory and offer faster access to the Internet, BSNL has ordered mostly 16K cards.
Sharon, according to BSNL officials, is the firm that has the contract to supply SIM cards for Obertheur in India, which is one of the top SIM card manufacturers in the world.
Interestingly, most private cellular operators, such as Airtel and Hutch, do not deal with vendors but have been procuring their SIM cards directly from the manufacturers of SIM cards.
While BSNL officials say they will penalise their turnkey suppliers for this -- it was the suppliers who chose to buy their cards from Sharon -- this penalty will at best run into a few million rupees. The opportunity costs of delays, however, are higher.
The cellular business has grown from 1.2 million users in 1999 to 10 million today, and hence, each day of delay is critical.
AT&T's IDEA Cellular, for instance, has put together a subscriber base of over 100,000 in just one month of operations in Delhi.
And with Reliance Infocomm entering the market at rock-bottom rates, it is clear that BSNL's delayed launch will cost it dearly.
BSNL's launch was already delayed by over 40 months because the firm got its cellular licence towards the middle of 1999, soon after the government came out with the New Telecom Policy in April 1999.
Apart from long delays in the tendering process, BSNL's cellular foray also went into a limbo for several months when Communications Minister Pramod Mahajan insisted the prices quoted by suppliers be reduced, even after BSNL's board had approved the rates.
Finally, the suppliers cut prices marginally, but this resulted in a six-month delay.
BSNL also plans a second phase which will be for 2.5 million phones. According to company officials, the infrastructure for this is likely to be in place by the middle of next year.
Stung by its Sharon experience, however, BSNL has not yet decided on its SIM card flow.
© 2025