Indian state-run telecom Bharat Sanchar Nigam Limited (BSNL) may open direct negotiations for a stake in Kuwaits Zain if its exclusive talks as part of a consortium fail.

BSNL, along state-run Mahanagar Telephone Nigam Limited, are part of a group led by little known Indian company Vavasi which aims to take a 46 per cent holding in the Kuwaiti firm from shareholders including the Kharafi Group.

BSNL chairman Kuldeep Goyal yesterday said that Vavasi had an exclusivity clause for talks.

"If that ends, and suppose this proposal does not go through, and there is a possibility of having a direct negotiation, we would like to look at it."

Goyal said BSNL was waiting for some information from Vavasi on the Zain deal and that if the company had to go directly, it would take MTNL along with it.

Goyal said there was no plan to call fresh bids for BSNLs 93 million GSM line order. A newspaper reported on Thursday the telecoms ministry had suggested a fresh tender to ensure more participation and better prices.

"There is no question of retendering now," Goyal said.

He said BSNL had awarded contracts for 8m lines to Chinas Huawei, and was in advanced stages of price negotiations with Swedens Ericsson for some others.

BSNL, Indias No 4 mobile operator, last year sought bids for 25m GSM lines each for its operation in the countrys north, south and west and 18m lines in the east.

Ericsson had qualified on technical grounds for the north and east regions and Huawei for the south region.

"Immediate order to Huawei would be for 8m lines. Total order is for 20m," Goyal said.

Talk of an initial public offer of BSNL was renewed after India mandated more sales of shares by state-run firms and said it would cap government holdings at 90pc.

The government, which fully owns BSNL, had last year proposed selling a 10pc stake, looking to raise around $10 billion, but the sale was headed off by political and labour opposition.

Asked about possible timing of an IPO, Goyal said the government would decide. He said BSNL was in the process of appointing a consultant to increase shareholder value.