Don’t miss the latest developments in business and finance.

Global Bids For Vsnl Regional Hub

Image
BSCAL
Last Updated : Aug 26 1997 | 12:00 AM IST

Videsh Sanchar Nigam Ltds decision to select a joint venture partner for its proposed regional hub project through an open tendering process is being interpreted as a well-disguised deregulation of the governments international telecom monopoly.

The tender will offer majors like AT&T, MCI, Sprint, Hong Kong Telecom, Deustche Telekom, France Telecom, Singapore Telecom, Telstra apart from British Telecom (BT) a chance to pick up equity in a venture which will handle traffic out of South Asia and lease capacity to VSNL.

It will also allow the winning foreign carrier a lead in the race to provide long-distance services national and international in the country. Telecom sources feel that the company which is finally selected will have the advantage of offering services on depreciated telecom transmission equipment in the country, translating into lower tariffs.

More From This Section

Wittingly or unwittingly, the government is introducing a second operator to carry international, and later national, long-distance services in the country. The operator may not get to handle the traffic in the short term, but will certainly do so in the long term. The fact that VSNL will be a part of the venture may be beneficial for the government, said a telecom source. The government has already promised to review its monopoly over national long-distance services in 1999. The monopoly over international telephony services is slated to be reviewed in 2004.

According to the original regional hub project proposal, BT and VSNL were to hold 40 per cent each in a joint venture. VSNLs decision to drop BT as a partner in the proposed $480 million (Rs 1,620 crore) regional hub project and go in for an open tender is believed to have been taken due to pressure from the department of telecommunications (DoT) and other quarters in the Union government.

Senior DoT officials had expressed reservations about the BT-VSNL venture in the past. The project which was to link a trans-Eurasian fibre optic cable ending at Karachi to India at seven points and spurs to Sri Lanka, Bangladesh and, possibly, Mauritius and Singapore was seen as a backdoor entry into domestic long-distance services.

Government officials felt that by setting up long-distance capacity at seven landing points in the country and, crucially, having a land-cable running between Jullundhur and Islamabad in Pakistan, BT-VSNL would become a serious threat to DoT when the country decided to open domestic long-distance services to competition.

However, DoT now seems to have accepted that the regional hub project will not affect its monopoly over domestic long-distance services and that of VSNL over international telephony. This the age of alliances and there is no doubt that VSNL has to forge one in the future, telecom secretary A V Gokak had said earlier.

Instead, the department of telecommunications wants VSNL to adopt a transparent process while selecting a joint venture partner. Hence, the open tendering process. VSNL had taken the services of a consultant before zeroing in on BT as its partner for the project. This selection process had been criticised for not being open enough.

Also Read

First Published: Aug 26 1997 | 12:00 AM IST

Next Story