The BPL Innovision Business group has initiated talks with the Tatas for a possible alliance for their proposed foray into the national long distance (NLD) telephony business.
The alliance, if the talks bear fruit, will lay optical backbone across the country in a phased manner. The entire project could see a minimum capital outlay of at least Rs 2,000 crore over the next couple of years.
"We have initiated talks with the Tatas for a possible NLD alliance. It could either be a consortium or a joint venture. We have not yet signed any agreement on this," said Rajeev Chandrasekhar, chairman and chief executive officer, BPL Innovision Business Group.
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Kishore Chaukar, managing director of Tata Industries, said: "We are in talks with the BPL group, among others, for a tie-up on the NLD foray. However, we need to look at all aspects of business in the long run. The NLD business could be viable if we could go alone as well."
The two could rope in some other strategic partners as well at a later stage, sources close to the negotiations said. The proposed NLD alliance would be the second major project these group would be taking up.
The Tatas have chalked out a gameplan for the telecom business with a possible investment plan of Rs 8,000 crore. According to BPL's plans, it was looking to unveil services in south India at a project cost of Rs 1,500 crore.
The latest move follows the announcement last month of the mega-merger of BPL Communications with the Birla-Tata-AT&T union forming the largest cellular operator in the country with a subscriber base of over one million.
The talks between the two business houses creates an interesting situation as both have separately bid for the public sector VSNL, which also will get into the NLD business. VSNL has been promised a free license by the government.
Though the BPL and Tata groups announced their individual NLD plans last year, they have not yet applied for a licence.
The proposed entity is likely to launch NLD services across the country, but its main focus would be in areas where it has a cellular presence. The combined entity of BPL and Birla-Tata-AT&T has operations in Mumbai, Maharashtra, Goa Kerala, Tamil Nadu, Andhra Pradesh, Gujarat, Madhya Pradesh and Chattisgarh, and it has bid for Chennai, Karnataka and Delhi circles as a fourth cellular operator.
The proposed alliance would be to enable BPL Innovision to take on leading competitors such as VSNL, Mahanagar Nigam Telephone, Bharti and Reliance.
Bharti and Reliance are in advance stages of launching their respective service in India. VSNL has recently said its NLD would be launched by the end of the current year.