Tech Mahindra has pulled out of an IT tender floated by Bharat Sanchar Nigam South zone, paving the way for its newly acquired partner, Mahindra Satyam, to fight it out with Infosys and Wipro.

The IT contract is estimated to be worth $300 million, according to two sources close to the development. Tech Mahindra was among those that had initially bid for the project, but it did not re-submit its quote after BSNL extended the tender by six months without giving the bidders the freedom to revise the price.

TCS and HCL Technologies were the other bidders for the project, but they have not yet signed an important undertaking, according to sources in the PSU. But they have time till Friday noon to sign up and may still qualify for the contract.

The IT contract is part of BSNLs 93-million line GSM project which was divided into four parts including network equipment, tower infrastructure and IT.

Each of these parts has been further divided into four zones. While the network equipment part has got stuck in controversy after BSNL disqualified Nokia Siemens from the bidding process, the IT part of the project is yet to be awarded. The total IT deal across all four zones is worth a billion dollars.

BSNL had invited bids for setting up operations support systems (OSS) and business support system (BSS) software. Global players including Comverse, Convergys, HP, EMC, Juniper and Oracle have partnered with the Indian IT companies to bid for the project.

This is the first time that BSNL has invited separate bids from IT solutions providers. Earlier, this part of the project was built into the overall GSM contract.

For example, in the previous contract, Ericsson was given the mandate to integrate all part of a mobile network including base stations, hardware equipment and the software. This was done to make it easy for BSNL to negotiate with just one company for the entire project. However, it had also led to some controversy since the companies which won the bid would eventually change the software solutions provider in a bid to maximise earnings.