The last time Nortel aggressively waded into India, it ended up losing more than $260-million on a GSM/GPRS deal to expand Bharat Sanchar Nigam Ltd.’s wireless network – a project pushed by ex-CEO Bill Owens despite the objections of ex-COO Gary Daichendt, who correctly believed it was an uneconomic proposition.
Since then, Nortel has taken a lower-key approach by making small investments (e.g. Sasken Communications) and winning some interesting, but not major, contracts. Call it a pragmatic strategy towards one of the most intriguing, but complex, markets in the world.
There’s speculation, however, that Nortel could take a significant step forward in India if it can win some of BSNL ‘s $910 million order for GSM lines. When bidding for the deal was completed earlier this year, Ericsson won 60%, or $1.3-billion worth of business, with a $91 a line bid. Nokia bid $171 a line to finish second but missed a deadline to respond to the BSNL order.
If Nokia doesn’t get its act together, this may open the door to Ericsson or Nortel – assuming either supplier is willing to offer attractive pricing.
http://www.allaboutnortel.com/2006/06/13/nortel-bows-out-of-india/
Lets cross- link your other post about BSNL in which you said
“the fact it has lost $327 million to date on a $350-million deal to expand BSNL services ”
in other words total cost of the deal was $677 mill or $140-150 per line 3 years ago /my estimate/
Did Nokia bid $171 and decided not to take it anyway?
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Nortel Bows Out of India
June 13th, 2006 | by Mark Evans |
Nortel has decided not to bid on new equipment contracts with Bharat Sanchar Nigam Ltd., which plans a $4.8-billion expansion of its wireless networks in India. Nortel chief strategy offficer George Riedel told the Ottawa Citizen that Nortel bowed out “because economically it was not as attractive as it needed to be.” (translation: the margins are probably razor-thin so it will be difficult, if not impossible, to make any money from the deal). Nortel’s reluctance to pursue more business with BSNL may have something to do with the fact it has lost $327 million to date on a $350-million deal to expand BSNL services to rural villages. BSNL said it will pick two winners to share the new contract from suppliers such as Ericsson, Nokia, Motorola, Siemens and China’s ZTE. Alcatel will also get part of the deal through an alliance with Indian supplier ITI.
Observer
This sounds like Nortel would have to compete with Ericsson (who is almost half the cost to that of the second place contender, Noika).
Nortel already lost a bundle trying to get their foot in the door where instead they shot themselves in the foot losing so much money. They also blamed local supply chains if I recall and what ever happened to the 50% balance of that order under the same terms?
This speculation strikes me as rather absurd in light of Nortel’s history and costs.
http://deleted Nortel Watcher
The new GE guys were brought in to make the company more efficient. If they can’t bring costs down enough so that Nortel can be competitive against Ericsson et al in these emerging markets, what good are they?
BSNL Looking to Award $910M contract
The last time Nortel aggressively waded into India, it ended up losing more than $260-million on a GSM/GPRS deal to expand Bharat Sanchar Nigam Ltd.’s wireless network – a project pushed by ex-CEO Bill Owens despite the objections of ex-COO Gary Daichendt, who correctly believed it was an uneconomic proposition.
Since then, Nortel has taken a lower-key approach by making small investments (e.g. Sasken Communications) and winning some interesting, but not major, contracts. Call it a pragmatic strategy towards one of the most intriguing, but complex, markets in the world.
There’s speculation, however, that Nortel could take a significant step forward in India if it can win some of BSNL ‘s $910 million order for GSM lines. When bidding for the deal was completed earlier this year, Ericsson won 60%, or $1.3-billion worth of business, with a $91 a line bid. Nokia bid $171 a line to finish second but missed a deadline to respond to the BSNL order.
If Nokia doesn’t get its act together, this may open the door to Ericsson or Nortel – assuming either supplier is willing to offer attractive pricing.
Source: Reuters
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