UPDATE: India's BSNL Confirms $4.5 Billion GSM Contract

NEW DELHI -(Dow Jones)- India's state-run telecommunications operator Bharat Sanchar Nigam is set to award equipment makers Ericsson and Nokia Siemens Networks an estimated $4.5 billion to $4.7 billion combined contract in the next couple of days, a senior official said Thursday.

The deal, which was blocked by rival Motorola in a court case until last month, will see Ericsson take 60% of the contract, while the newly formed Nokia Siemens Network joint venture will take on the job of installing the remaining 40% of the 45.5 million GSM mobile communications lines.

"We have worked out all the details and are ready to place an advance purchase order in the next one or two days," BSNL's Director (Finance) S. D. Saxena told Dow Jones Newswires.

Saxena said the price being paid for executing the project is about $100 to $103 per line. In November an Indian court stopped BSNL - India's third largest mobile operator by subscribers - from awarding the contract, after Motorola said it had been unfairly disqualified from the bid process.

Nomura Securities analyst Richard Windsor said that the deal comes as no surprise and that the two telecoms equipment makers had been tipped for the contract last year.

In 2006, Ericsson emerged as the lowest bidder for the BSNL tender. Nokia was the second lowest bidder.

Last week Ericsson Chief Executive Carl-Henric Svanberg told Dow Jones Newswires that India would become increasingly more important for the world's largest wireless equipment maker.

The Indian mobile phone market is seeing phenomenal growth, said Svanberg, adding more than 6 million subscribers a month. The Indian government plans to have 500 million mobile users by 2010.

"We're installing a new base station every 25 minutes in India and that's likely to double," said Svanberg.

BSNL added 1.98 million GSM subscribers in March, compared to 1 million in February. It now targets to add 3 million subscribers per month.

India's largest mobile phone operator Bharti Airtel has been adding at around 1.5 million to 1.75 million per month; India's nine GSM operators put together are adding around 6 million to 7 million users per month.

Company Web site: http://www.ericsson.com

-By Shaleen Agrawal, Dow Jones Newswires; 91-11-23074020; shaleen.agrawal@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 17th May 2007