$2 bn Military telecom contract to be up for grabs soon 21 Sep 2009, 0330 hrs IST, Joji Thomas Philip & Shelley Singh, ET Bureau NEW DELHI: The domestic market in India is set to see a significant game changer with one of the largest IT and telecom hardware contracts,worth around $2 billion (Rs 10,000 crore), to be up for grabs soon. The mega project involves creating a nationwide 43,000-km long alternate communications network for the armed forces, who in turn will vacate a bulk of the radio frequencies or spectrum they currently occupy for commercial telephony. Spectrum is the lifeline for mobile telephony as all communication signals travel on these airwaves. The Request for Proposal (RFP) of the project, which has been in discussion for over two years, is set to be issued by the month-end on BSNL’s website as the telco will execute the contract. At present, the detailed project report is being prepared by the representatives of the Army & Navy in collaboration with BSNL. The contracts will be awarded within 60 days after the project report has been cleared by the Telecom Commission and the union cabinet, says a Department of Telecom (DoT) note on the issue. In the first of its kind in India, all successful bidders will have to transfer technology, manufacture all key components in collaboration with domestic firms and also part with their IPR due to the security implications of the project. Given the scale of the project, it is unlikely to go to a single vendor and multiple vendors could comprise a combination of private and public entities. According to sources, for project companies such as TCS, Infosys, Wipro, HCL, Tech Mahindra and state-owned outfits like C-DAC, ECIL and BEL, along with telecom equipment majors such as Motorola, Ericsson , Alcatel Lucent and Nokia Siemens Networks, are likely to be among the bidders. An added incentive for successful bidders is that following the completion of this project, the Centre will then hand out an additional Rs 5,000-crore project to manage and maintain this network for the next 10 years. Successful equipment vendors will have to manufacture all core components in India, failing which they have to enter into collaborations with state-owned companies such as Indian Telephone Industries (ITI) and BEL to fulfil this obligation, a government official associated with this project told ET. IT majors too will have to share IPR rights for their services with BSNL and other state-owned entities such as C-DAC. In May 2009, the communications and the defence ministry had signed an MoU, under which the armed forces will release up to 45 MHz of radio frequencies over a three-year period, of which 25 MHz would be for the 3G services and the rest for 2G, the airwaves on which all communications services in the country are currently offered. As per this agreement, the defence forces must also release two blocks (10 MHz) of 3G airwaves and one block of 2G frequencies immediately while the remaining would be released in phases over a three-year time frame, based on the progress or completion of this alternate communications networks. The cost of the alternate network for the Air Force is Rs 1,077 crore while it will be Rs 8,893 crore for the Navy and Army combined. When asked about it, Tanmoy Chakrabarty, V-P & head of global government industry group, said: “The defence project has been in discussion for some time. We will respond as and when the RFP is out.” TCS is currently pursuing about two dozen government projects including those from defence, power sector and railways. Infosys did not reply, citing silent period requirements prior to the results. Though in a recent interview, head of Infosys India business unit Binod HR told ET: “In the domestic market, we are already bidding for a few defence projects and will pursue any relevant opportunity that comes by. Given that the private sector has reduced intensity in the domestic market, the government projects are definitely very attractive.” DoT sources also said Chinese equipment majors such as Huawei and ZTE will not be allowed to participate in this project due to security concerns. Besides, other bidders also cannot source equipment manufactured in China. Even equipment imported from the West will have to pass stringent security tests in a government-controlled test bed for every product before the same can be installed in the alternate communication network project.