TelecomLive April 2024

IDC operations by NxtGen www.telecomlive.com 34 TelecomLIVE April 2024 Bailout byCMDBSNL A letter dated February 21, 2022 (see Scan-9 at pg 35) by BSNL CO reveals that CMD BSNL approved the bailout of NxtGen by telling BSNL MH to recover revenue share “fromNxtGenalongwith interest of 18 per cent per annum for delay in payment of revenue share” . This approval ignores the fact that all the audit reports in their conclusions had recommended detailed audit by experts, which was never carried out. This is not a simple case of delay in payment, but that of fraud, which required independent investigation by the CBI, like Telecommunication Consultant India Ltd (TCIL) has done recently. Two of its vendors were providing Indoor Building Solution (IBS) and Outdoor towers in the name of TCIL, but were not sharing the revenue. Finally, once they were caught, one of them paid past dues alongwith interest. TCIL blacklisted both the companies, and the matter was referred to CBI. It has registered a case, and conducted searches at various locations in Delhi-NCR. SEBI EoI forCloudServices BSNL should have awarded the ECI contract through open tender- ing, instead of handing over this Rs 200 crore worth project to tainted NxtGen. NxtGen is not the only player in the market. On May 29, 2019, Securities and Exchange Board of India (SEBI) had invited an EoI for the implementation of its Private Cloud Infrastructure. In this, as many as ten bidders were shortlisted for financial bidding, out of which four were ranked L1 to L4 based on their financial bid, as given below: 1. Dimension Data India Pvt Ltd (L1) 2. Hewlett Packard Enterprise India Pvt Ltd (L2) 3. EITServices India Pvt Ltd (L3) 4. Wipro Ltd (L4) 5. ESDS Software Solution Pvt Ltd 6. Hitachi Systems Micro Clinic Pvt Ltd 7. IBMIndia Pvt Ltd 8. Inspirisys Solutions Ltd 9. NxtGen Datacenter and Cloud Technologies Pvt Ltd 10. Tata CommunicationLtd If proper universal EoI is drafted, more companies will come forward and participate in it. Once they know that they will not be able to win the contract due to EoI conditions, they will not partici- pate. TLQs toBSNL We sent the following specific questions toCMDBSNL: Sir, we are doing a story on NxtGen's fraudulent act at IDC Fort. In this regard, please let us knowwhy the company was not b l ack l i s t ed f or prov i d i ng services secretly using BSNL Infra. They could do so because, BSNL ignored the EOI condition under which BSNL should receive PO directly and also payment. If BSNL could have adhered to this condition, there was no way that NxtGen could do t h i s f r aud , and t h e r e would've been no revenue leakage. A letter dated Febru- ary 21, 2022 from BSNL also shows that CMD BSNL bailed them out by approving levying of 18 per cent interest on payment due from customers not disclosed by them. Instead of lodging FIR against them in Police/CBI, Election Commis- sion order dated August 2, 2023 was also passed on to them, even though the investigation against them was still going on by BSNL vigilance wing. Also, please let us know their status of agreement validity. BSNL' reply toTLandanalysis BSNL replied to the questions raised by us (see Scan-10 at pg 10). The highlights of the reply and our their existing contract is up to 2025 and after the expiry of contract they can place the PO to BSNL”. The above response by BSNL MH to BSNL CO also reveals that no new customers are coming from NxtGen side. Let us see the revenues from IDC operations. Table-1 below has been extracted from BSNL MH's report to BSNL CO. It shows total revenue for FY21 from IDC Mumbai, Faridabad and Ahmedabad is Rs 99.18 crore. On the other hand, Table-2 shows BSNL's total revenue from IDC operations is Rs 99.07 crore. It has gone up to Rs 123.46 crore in FY22 andRs 135.86 crore inFY23.When no new customer is being added by NxtGen in FY22 & FY23, we presume that the entire business is being generated by BSNL and being passed on to NxtGen, wherein BSNL is retaining just 20 per cent share. From where this business is coming. For example, Election Commission of India (ECI) had agreements dated March 2, 2015 and April 1, 2018 extended by letter dated March 29, 2022 for Cloud services. It was a big business, which was further increased vide an agreement dated July 27, 2023, made effective from April 1, 2023 till March 31, 2025. This new two year contract is worth at least Rs 83.13 crore (without tax) per year. While a massive fraud was unearthed against NxtGen, BSNL chose to award the ECI contract to NxtGen. T-1: IDC revenue from Mumbai, Faridabad & Ahmedabad (Rs cr) Share FY17 FY18 FY19 FY20 FY21 Apr-Jun 21 Total NxtGen 29.65 37.74 41.28 58.52 79.35 17.10 263.64 BSNL 8.08 9.46 9.71 14.14 19.83 4.26 65.48 Total 37.73 47.20 50.99 72.66 99.18 21.36 329.12 T-2: Revenue earned by BSNL from IDC (Rs Cr) FY21 FY22 FY23 99.07 123.46 135.86 Source: BSNL's tender dated 09.10.2023