State-owned BSNL has cancelled Chinese equipment vendor Huawei Technologies' Rs 1.4 billion contract for supplying equipment for 1.05 million CDMA lines in partnership with Himachal Futuristic Communications Limited (HFCL) and Semiconductor Complex Limited (SCL). BSNL had issued a show-cause notice to Huawei in October for failing to supply equipment and has also encashed HFCL's bank guarantee of Rs 20 million for the consortium's failure to honour the contract. BSNL executives said a fresh tender for 3.5 million CDMA lines would be issued next week where HFCL and Huawei would not be permitted to participate. BSNL said the consortium's failure to supply equipment for CDMA lines would be a major setback to its plans to clear waiting lists in rural areas by 2006.