Ericsson rejects Nepal Telecom’s 10 million GSM lines project

After Huawei Technologies, Swedish telecom system vendor Ericsson has also refused to undertake the package A of Nepal Telecom’s (NT) ambitious 10 million GSM lines project.

A week ago, the telecom giant had terminated its contract with China’s ZTE Corporation for the package A — installation of 5.2 million GSM lines in the eastern, mid- and far-western regions and the central region outside the Kathmandu valley — and had asked the Swedish company to undertake the package.

NT terminated the initial agreement with ZTE after the two sides failed to reach a conclusion over costs even after three months of negotiations. Now, with all three bidders rejecting the offer, the biggest project of NT to expand 2G, 3G, and 4G services has hit snag, seriously affecting its market strategy.

“I came to know about Ericsson’s denial on Monday,” said NT board member Pramod Gurung. He said although Huawei has in advance informed NT that it would not be able to undertake the package A, NT will formally ask the Chinese vendor as per the bid terms and conditions to accept the package.

Ericsson has told NT in written that it would not be able to work on the package at the price quoted by Huawei, according to a source. NT officials said going by NT’s bid conditions, Ericsson would have had to agree on the amount proposed by Huawei after the second lowest bidder ZTE rejected the package.

The 10 million lines project is being executed under two packages — A and B. Huawei had quoted the lowest for both the packages. According to NT, the Chinese firm had quoted $122 million for the package A and $85 million for B.

After rigorous legal consultations, NT on Tuesday issued a letter of acceptance (LoA) to Ericsson, asking it to sign a contract for the 5.2 million mobile lines within 15 days. “Ericsson has to either honour the conditions of tender or lose bid security of $4.6 million like ZTE,” said the source.

NT officials now say there are possibilities of a fresh tender invitation for the package A.

What has made the situation complicated is that Huawei, to whom NT plans to request to undertake package A, has already refused. Huawei on Aug 27 had informed NT that it would not be able to accept the package. It has also filed an appeal in the Supreme Court, seeking a stay against any possible forfeiting of its bid security of $4.6 million. The validity of Huawei’s bid security expires on September 24.

“We will formally ask Huawei to undertake package A,” said senior NT official. “If Huawei refuses, there would be no options to inviting a new tender.”

NT has already signed an agreement with Huawei for the supply, delivery and installation of the equipment and commissioning of 4.8 million lines for the package B at Rs 6.74 billion. This package is targeted for the Kathmandu valley and the western development region.

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