State-run telecom major BSNL's plans to expand the GSM network has again come across a hurdle with Nokia Siemens Networks (NSN) refusing to accept its share of the 22.5-million-lines contract due to price differences.

Ericsson was awarded 60 per cent of the total contract and NSN being the second lowest bidder was given the rest. Ericsson had quoted about $107 per line, while NSN quote was about $167.

Negotiations are still on, BSNL chairman and managing director Kuldip Goyal told reporters, adding that price difference was the main reason for NSN not accepting the order.

"We are exploring three alternatives -- award of whole contract to Ericsson, talking to BSNL's existing vendors for add-on capacity and finally floating a fresh tender," Goyal said.  The final decision on the contract is expected to be taken within a month, he said.

Asked whether Ericsson is willing to accept the full order, Goyal said: "We will write to Ericsson for this." He also indicated that in case of fresh tender the PSU may do away with the clause of having manufacturing base in India that was a must to participate in the tender.

Deletion of this clause would allow more companies, especially from China like ZTE and Huawei that have not been able to set up manufacturing facilities in India, to participate in the tendering process.

ZTE could not qualify for BSNL tender, while US company Motorola was disqualified on technical grounds.  Motorola had challenged its disqualification in the court but later withdrew the case. This had led to the delay in tendering process by about eight months.

BSNL has been losing its market share and subscriber addition has been falling due to capacity crunch. It currently has a capacity of providing five million lines, which would be exhausted in the next 2-3 months.

However, Ericsson has started its work on the contract and equipment supply would start in a couple of months, Goyal said. BSNL has also awarded a contract for west zone to ITI and Alcatel Lucent combine. This contract is believed to be out of track.