Банкеръ Weekly


Bulgarian Railways Offer Mega-Deal to Telecoms

Bulgaria’s three mobile operators - MobilTel, Globul and Vivakom will enter into heavy competition for one of the most attractive contracts in the local market. The state-owned enterprises in the rail sector have decided to conclude a four-year framework agreement with one of the telecom companies to provide electronic communications services. The fact this is a very attractive deal is beyond doubt - not at the last place because it will involve companies such as Bulgarian State Railways Holding, National Railway Infrastructure Company (NRIC), BDZ - Freight, Railways - Passenger Transport and the state enterprise Transport Construction and Rehabilitation. The minimum number of SIM-cards in the closed corporate group, for which monthly subscription will be paid is 6,800. But as it is well known, even taken separately, BDZ and NRIC are the largest employers in Bulgaria with more than 10,000 officials, so there will be no wonder if customers turn out to be a lot more than 6,800.

It is worth to mention the price the state companies are willing to pay to use GSM and mobile internet services. The total price for the entire term of the agreement has been set to 3,354,000 levs, or about 70,000 levs per month.

It is logical for the formation of such a large group and for a conclusion of a four-year contract the entities to expect significant discounts. Unlike private companies, state enterprises are in a preferential position because they do not wait for operators to offer them prices but they can as determine their own rules. They can indicate how and what services they want and can fix maximum prices for them. Accordingly, MobilTel, Globul and Vivakom can only comply with the restrictions and develop even better offers in order to reach an agreement. In this case, the railway companies press providers of electronic communications services directly against the wall.

First, the greatest weight in the ranking of the tender offers will be given to the prices offered for different services. They are placed in such limits that seem surreal at the background of what the general public usually pays. For example, to obtain the maximum 50 points in this component the monthly subscription for each SIM-card of the telecom companies must be under one lev worth of fees without VAT. If the amount ranges from 1.01 levs to 1.50 levs, without VAT, the offers will get 25 points and for prices from 1.51 levs to 2.00 levs without VAT - they can count on only five points while for over two levs per month no points will be awarded.

The situation is similar to the price per minute of outgoing calls for subscribers of the corporate group after the exhaustion of the proposed number of free minutes. If the offer ranges between 0.00 levs to 0.04 levs without VAT the applicants will receive the maximum 20 points. About 10 points will be given to proposals in the range of 0.05 levs to 0.07 levs without VAT, while more expensive offers will not get any points here.

Quite close to the standard in the sector are the requested prices for mobile internet, which will be available only to specifically designated subscribers by the contracting authority. Package of 1.5 GB traffic on a smartphone will receive the maximum score if the price stays up to 7 levs without VAT. Ten gigabytes traffic through a laptop need to cost less then 12 levs a month.

Curious are the quantitative parameters that the state railway companies have set. They will award the highest possible (50 points) to offers of over 30,000 (or unlimited) free minutes in the group. At the same time, only 5 points will be given to offers with up to 10,000 free minutes. To win the maximum points for free calls to subscribers of other mobile and fixed networks, however, only 15 minutes will suffice.

As for the last indicator to form the final assessment of the relevant proposals - namely the speed of UMTS/3G network, what is interesting is that the railways only require a statement without tangible evidence. In cases where the declared speed data for download is from 25.01 Mbps to 42 Mbps, the participant in the tender will receive a maximum of 100 points, but whether these parameters will be guaranteed in reality, there is no guarantee and thus anyone can claim any speed.

Initially, according to the notice in the register of public procurement procedures, it was envisaged that the evaluation process takes into account the number of available base stations of the operator, but later on, the idea was rejected.

Otherwise, this is the third attempt of Holding Bulgarian State Railways, National Company Railway Infrastructure, BDZ - Freight, Railways - Passenger Transport and Transport Construction and Rehabilitation to unite in a group, in order to enjoy more favorable electronic communications services. The previous competition was announced on 26 June. Only a week later, it was terminated on the grounds that certain violations were found at the opening of the procedure which can not be removed without changing the initial conditions. Before that - on 23 October 2013 the first tender for a GSM-service provider was stopped. The then Director General of NRIC Milcho Lambrev said that during the procedure the evaluation committee had found several errors in the declared methodology for evaluation of bids.

What the developments will be in the new tender the general public is supposed to understand as early as mid-December, as the offers will be submitted by the end of next month. But having in mind the scale of the contract it will not be surprising if yet next week complaints are submitted to the Commission for Protection of Competition against the decision for the procedure’s opening.


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