The Videsh Sanchar Nigam (VSNL) stock on Tuesday fell by 10 per cent to Rs 229.40 following the guidelines announced by the Telecom Regulatory Authority of India's (Trai) for international long distance (ILD) telephony.
Analysts say the possibility of unlimited and unrestricted entry of players in ILD and the likely fall in call rates could have a negative impact on the revenues of VSNL in the long run.
Trai had recommended a low entry fee of Rs 25 crore and an annual revenue share of 15 per cent for new international long distance operators. VSNL's monopoly in ILD business is set to end during the current financial year.
"This could have some impact on its revenue base. However, the company could expect a substantial increase in the number of international calls. The expected increase in calls may balance the loss in the revenue due to reduction in tariffs," VSNL officials admitted.
Against the previous day's close of Rs 254.8, the scrip opened at Rs 248 on the Bombay Stock Exchange and the volumes traded was 5.42 lakh.
According to the Trai recommendation, the ILD operators would have to furnish a bank guarantee of Rs 25 crore and must also have a net worth of Rs 25 crore. "All serious telecom players will enter the business without paying much fee as there is no limit on the number of operators," analysts said.
The unlimited entry would ensure competition among players, analysts said. In turn, the Trai recommendations would help reduce the international call rates. Since the upper limit of international long distance call rates will be decided by Trai after opening up the ILD sector, private players will be able to fix their own rates.
