U.S. pips India for Nepal telecom project

Monday, 24 November 2003, 08:00 Hrs
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KATHMANDU: Despite strong lobbying by India, a U.S. joint venture pipped its Indian contender for a World Bank-funded telecommunications project in Nepal.

Telecommunications Consultants India Ltd (TCIL) had bid for the rural telephony project meant to supply telephone connections to 534 village development committee areas in eastern Nepal, out of the total 893 such areas there.

TCIL's partners for the five-year licence bid were Videsh Sanchar Nigam Ltd (VSNL), which held 20 percent stakes in the JV, and the local Nepal Ventures Pvt Ltd (NVPL), which held 40 percent with the remaining 40 percent held by TCIL.

The consortium was hoping to bag the project, being funded by the World Bank as a telecom area reform loan to Nepal, because of its proven expertise in providing telephone services in the Himalayan kingdom as well as asking for the lowest subsidy.

TCIL and NVPL are already partners in an Indo-Nepal joint venture that includes VSNL and Mahanagar Telephone Nigam Ltd (MTNL).

The four companies came together to form a consortium, United Telecom Ltd, that became the first private operator in Nepal to provide basic telephone services when it was granted a 10-year licence in October 2002 and launched operations in August this year.

India's Communications Minister Arun Shourie had come to Kathmandu for the launch, when he expressed hope that the rural telephony project would also be given to the Indian consortium for its competitiveness and proven ability to complete its task ahead of schedule.

For the World Bank-funded rural phone project, the TCIL-led consortium was asking for a subsidy of $11.11 million while the contender company, STM Wireless of California, was asking for $11.86 million.

However, the project has been awarded to the STM-led consortium, STM Telecom Media Pvt Ltd.

STM holds 55 percent of the shares, while Samart Communications Company of Thailand has 15 percent, STM Networks Inc U.S. 10 percent and Apollo Investment Pvt Ltd the remaining 20 percent.

The Indian business community has expressed its surprise at the awarding of the contract to STM on the ground that it had asked for a higher subsidy as well as had filed for bankruptcy.

Sources also said STM had a prior business deal in Nepal in which it was required to supply VSATs (very small aperture terminals) in about 60 rural areas for producing telephone connections.

However, they were reported to be malfunctioning. This is the second disappointment for TCIL in Nepal where it was also competing for mobile telephone services but was pipped by an Indo-Nepal joint venture Spice Nepal that, however, is yet to commence operations despite having been awarded the contract.

Source: IANS
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