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Qualcomm, Fujitsu may bag Essar's $140 m order

Qualcomm has been shortlist for supply of CDMA, or code division multiple access, based equipment. Fujitsu has been selected for supply of switches.

T O D A Y

• The Good Doctor • Essar's $140 m order • Bhubaneshwar STP • Indus to invest Rs 1 b

Sources close to the Ruias business family that owns Essar have been quoted as saying that a memorandum of understanding has been signed with the two companies but the purchase order has not been placed yet. The final purchase order would be placed after finalisation of the terms of supply.

The Ruias are strapped for cash at the moment. They are reportedly insisting that the entire supply be covered under a bridge loan.

However, the two potential suppliers are yet to make up their mind.

The Ruias have been facing financial troubles as banks and financial institutions are reluctant to fund the telecom sector. Their woes have been aggravated by an almost total lack of interest on the part of their foreign partner Bell Atlantic.

They have also not been able to bring in funds from GT Electronics, which has committed to buy 12.5 per cent equity in Essar Commission.

The Essar Group had earlier defaulted on payment to Siemens, which supplied equipment for their cellular network in Uttar Pradesh.

Regarding the possibility of the deal getting through, Qualcomm officials said, "We are very well placed." They also said that there are hurdles to be overcome before the contract is sealed.

Essar officials pleaded inability to talk about the contract, while Fujitsu's managers could not be contacted owing to their absence.

Sources said that eventually the deal would be through as none of the three parties have an alternative.

Qualcomm, for instance, has so far failed to get sizeable order from any operator despite its four years of operations in India. So far, the company could obtain just one order worth $42 million from Shyam Telecom.

Motorola and Lucent Technologies who have bagged prestigious contracts from Bharti and the Tatas have outwitted Qualcomm, which pioneered the CDMA technology in the world.

Ironically, Qualcomm is the licensor to its rivals for manufacturing CDMA-based equipment.

Fujitsu is in the red following the economic meltdown in Japan. The Japanese telecom equipment giant recently had to close one of its largest manufacturing units in Japan.

The Indian operations of Fujitsu have so far refused to look up.

In these circumstances, the company is expected to cling to the deal with Essar and agree to the supply conditions.

- Compiled from the Indian media

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