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January 28, 2003 | Business Standard
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VSNL in NLD capacity sharing talks
 

Videsh Sanchar Nigam Ltd (VSNL) is in talks with GAIL India and PowerGrid Corporation of India Ltd (PGCIL) for leasing national long distance (NLD) telephony capacity following state-owned BSNL’s reluctance to any alliance.

The company is being forced to review its NLD plans owing to a steep fall in tariffs and doesn’t want to set up its own capacities. Instead, it will lease them.

VSNL had approached BSNL for a tie-up to lease the NLD capacity. However, the talks did not fructify as BNSL “was not ready for any arrangement,” VSNL managing director SK Gupta told Business Standard.

Speaking to mediapersons here today after Ratan Tata, the non-executive chairman of the Tata group, released a book “The story of Videsh Sanchar Nigam Ltd”, by CNN Nair, Gupta said, “The way rates are falling, the whole business case might need a re-look.”

Gupta said the company would have to make changes in capital expenditure and other issues as the policy has been changing continuously.

“The business plan needs a constant review and dynamic updation. We might change the plan depending upon traffic pattern and viability of the circle where the services are launched."

However, he reiterated that VSNL will not shelve the project. VSNL till date has commenced services in around 10 stations.

VSNL is also close to finalising an STD agreement with BSNL and MTNL on tariff rates for terminating calls on the latter’s network from non-BSNL/MTNL networks.

“We will see the impact of the new charges and will sign an agreement sometime next week,” Gupta added.

Gupta said severe competition from other players such as Bharti has pulled down VSNL’s ILD traffic growth by 7 per cent for the nine months ended December 2002 compared with over 15-16 per cent in the same period last year.

“I have no hesitation in accepting that competition from other players have reduced our growth rate by 7 per cent,” he admitted. ILD services account for 79 per cent of VSNL’s total revenues.

On value-added services, Gupta said the company has commenced corporate net telephony early January 2003 and will soon introduce retail internet telephony within the current fiscal.

Earlier, when asked about the lowering of tariff rates by telecom companies, Tata said customers will not move to other operators owing to lower rates but would move for the quality of services.

“I expect some rationalisation for the well being of the telecommunications industry," he added.

After unveiling the book, Tata said VSNL is now in a different environment. “We need to shift gears in order to survive, grow and develop further," he added.