Nepal Telecom's deal with Chinese firms worries India

NEW DELHI: The Indian security establishment is watching with unease Nepal Telecom's decision to award the contract for the next generation telecom network in the Himalayan country to two Chinese firms.

There is apprehension about the step, given its long term security implications. One official argued that the decision could mean a virtual free run for Chinese companies that have links to the Chinese establishment on the communication network of Nepal.
Nepal Telecom, the government-controlled telecom monopoly, awarded the contract for installing the Next Generation Network (NGN) in August to two Chinese telecom firms, ZTE Corporation and Huawei. ZTE would install the equipment for NGN in Kathmandu Valley while Huawei would do so in the rest of Nepal. According to details, the two companies would complete the project, estimated at $19 million, in six months time.

According to sources, Nepal Telecom had with government approval called a global tender for NGN. At least 10 international companies took part in the tender. But only four were shortlisted, and from them the two Chinese firms were selected.

ZTE and Huawei would erect some 2,500 towers all over Nepal, in addition to the 700-odd towers of Nepal Telecom already in operation for CDMA network.

According to the plan, Nepal Telecom plans to extend its existing Evolution Data Optimised service on advanced CDMA technology which is at present available only in Kathmandu, Banepa and Pokhara. It would be extended to other cities and rural areas. Nepal Telecom is also introducing Voice Over Internet Protocol services.

Sources are surprised especially by the favours shown to ZTE in the contract. In 2004, ZTE had won a contract in Nepal for supplying equipment for building the network to eventually cover most parts of Nepal. But dozens of UHF guided devices, roof top towers, base trans-receiver station equipment, cooling devices etc turned out to be faulty. Sources point out that despite this fiasco, Nepal Telecom awarded the GSM contract to ZTE in 2005 and 2007.

To compensate for the losses, ZTE recently agreed to provide CDMA equipment worth over $500,000 to Nepal Telecom.

The move to award the contracts to the Chinese firms comes at a time when Nepal's Public Accounts Committee had directed Nepal Telecom to cancel a planned 'bridging project', and to call fresh tenders. According to sources, Nepal Telecom was planning to acquire 1.5 million GSM and CDMA mobile lines from an anonymous Chinese supplier for the bridging project.