"MTNL placed an Advance Purchase Order on March 4, 2015, on Nokia Solutions and Networks India Ltd. In response, the vendor has not accepted the security clause in the APO," Communications and IT Minister Ravi Shankar Prasad informed the Lok Sabha in a written reply.
"MTNL is yet to take a final decision in the matter," Prasad said.
MTNL plans to upgrade its network with investment outlay of about Rs 400 crore. Under the project, MTNL has decided to add 1,080 number of 3G sites and 800 number of 2G sites in Delhi and 1,080 number of 3G and 566 number of 2G sites in Mumbai to its network.
Nokia Networks was shortlisted in December 2013 as the lowest bidder for installing all the 3,526 mobile sites.
Alcatel Lucent (ALU), Huawei Technologies and ZTE also qualified in technical rounds for the project which is estimated to cost about Rs 400 crore.
In April, Nokia and ALU decided to merge their units globally. The deal is expected to close in first of 2016.
After installation of additional mobile towers, the peak download speed on MTNL's 3G mobile network is expected to reach 21.1 megabit per second from present peak speed of 3.6 mbps.
In separate reply on call drops, the minister said, "The rapid growth of data traffic in cities and the sharp growth in smartphones have led to congestion in the network."
He expressed concern on issue of call drops and added that government is of the opinion that the efforts of TRAI would need to be supplemented with action by the Department of Telecom.