BSNL buys broadband gear for Rs 200 cr

NEW DELHI: State-run Bharat Sanchar Nigam Ltd, India's largest telecoms firm by sales, is buying telecoms gear worth two billion rupees from local firm HTL Ltd and U.S. company UTStarcom Inc.

N.K. Mangla, BSNL's director for marketing, said the New Delhi-based firm was buying the equipment for its fledgling broadband services.

"Letters of intent have been given and the purchase orders will be issued in the next two weeks," Mangla said. "The total order size is close to two billion rupees and UTStarcom will get about 30 percent of the order."

Unlisted BSNL provides fixed line and mobile services throughout India except in the two main markets of Delhi and Bombay, where another state-run firm, Mahanagar Telephone Nigam Ltd, operates.

Both MTNL and BSNL compete with private players such as the Reliance and Tata business groups and Bharti Tele-Ventures Ltd in the country's booming telecoms market.

California-based UTStarcom makes network gear for emerging markets such as India and China. The company was founded by two Chinese immigrant entrepreneurs in the United States.

Apart from expanding its mobile services networks in the country, BSNL is making a foray into broadband services because there is huge potential for high speed data connectivity in India.

The broadband market is still in a nascent stage of development and the number of connections is more than 200,000.

Only two in 10,000 Indians have a high speed Internet connection compared with 2,500 in 10,000 people in South Korea. The main reason for low penetration is that a 256 kilo bytes per second broadband connection costs more than 1,000 rupees a month.

India's telecom regulator is pushing for tax cuts and a reduction in license fees to slash costs and make the service more widespread. The country has a target of 20 million broadband connections by 2010.