VSNL signs interconnect agreement with state-run telecom majors

Wednesday, 20 November 2002, 08:00 Hrs
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NEW DELHI: An eight-month old spat over routing of overseas phone calls from and to India ended Tuesday with the Videsh Sanchar Nigam Ltd. (VSNL) signing an interconnect agreement with two state-owned telecom service providers.

As part of the agreement, Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) are required to route all their outgoing overseas phone calls through VSNL, the newly privatised telecom giant.

"The agreements signed by VSNL today follow several months of negotiations with BSNL and MTNL", said S.K. Gupta, managing director of VSNL, India's biggest overseas telephone services provider.

"These agreements provide the basis for traffic settlement between the companies, underlined by the commitment of BSNL and MTNL to route all their outgoing traffic through VSNL," Gupta added.

Prior to VSNL's privatisation, the government had stated that both BSNL and MTNL would necessarily route their international traffic on VSNL's network for two years.

After privatisation, however, the government permitted the public sector telecom companies to consider steering the traffic to other operators as long as they offered better commercial terms.

BSNL had been pushing VSNL to match the interconnect rates offered by other private sector overseas phone service providers -- Bharti Telesonic and Data Access.

VSNL had approached the Telecom Regulatory Authority of India (TRAI) to intervene in its interconnection spat with BSNL.

The company had written to the authority asking it to arrive at suitable interconnection rates based on "internationally-accepted cost basis", and stop BSNL from shifting its international traffic to other service providers.

BSNL, the country's largest telephone firm, provides fixed-line services in all parts of India except New Delhi, and financial hub Mumbai where another state-run company, MTNL, is the market leader.

The private sector Tata group in February bought a 25-percent stake in VSNL from the Indian government. The Tatas have followed this up with an open offer to buy a further 20 percent from minority shareholders.

The government still owns about 26 percent in VSNL, which is also a leading provider of Internet services.

"VSNL can now look forward to securing its core international telephony business and aggressively implementing its ambitious growth plans in other telecom services areas such as national long distance and Internet telephony," Gupta said.

The company's July-September net profit dropped 33 percent to 2.46 billion on sales that fell 22 percent to 12.48 billion.

VSNL, which gets 90 percent of its revenue from overseas calls, lost its monopoly on international telephony in April.
Source: IANS
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