VSNL struggling on most business fronts

By SiliconIndia   |   Friday, 21 November 2003, 08:00 Hrs
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NEW DELHI: For Videsh Sanchar Nigam Ltd, it does appear to be a struggle on most of its business fronts.

Its international long distance (ILD) telephony business has for the first time ever, reported lower volumes (in calling minutes) for the first half of the current financial year, compared to that of the previous corresponding half, said a senior official with the company, who declined to give figures.

This decline is in continuation of the previous year's trend. During 2002-2003, the company had reported zero growth in annual volumes after a consistent 16 per cent to 20 per cent annual growth during the previous few years.

Its market share has been dipping after competition was allowed in ILD sector and after the entry of Internet telephony. But the expectation that lower ILD tariffs would expand the market for everyone and take care of absolute volumes for players has not happened.

On the national long distance (NLD) front, VSNL has established 100 points of presence in the country but is yet to sign interconnect agreements with the two main players - Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd. "And one knows how long these things take," said an official. Only a few private operators have signed up with VSNL.

The absence of a carrier access code, which would allow end users to choose their ILD or NLD provider, also makes VSNL's long distance services anonymous on the retail front.

Also on the ISP (Internet Service Providers) front, VSNL, after being nearly eight years in the business,has only seven-lakh subscribers and points of presence in 22 cities. But BSNL has over 7.5 lakh subscribers.

"And really, what is our incentive for providing dial-up prepaid packages when the bulk of Internet access charges are taken by the telephone operator?" asked the official. Although VSNL has reported good sales in leased lines and some other services, and intends to concentrate on corporate clients and enter the field of corporate Internet Protocol-Virtual Private Networking (VPN) in a big way, analysts are still sceptical. The company has also acquired Gemplex, a US-based business networking services provider,

"VSNL has not been quick on its toes, in bringing out calling cards and other such retail products," said an analyst who added that internationally, telecom carriers have moved out of the VPN business, which is best left to outfits which do only VPN and allied solutions.The newly formed common marketing and sales outfit, the Tata Indicom Enterprise Business Unit of the Tata group companies, such as Tata Teleservices, Tata Teleservices (Maharashtra), VSNL and Tata Internet Services, has said that it has earned Rs 200 crore in business for these companies, out of which 75 per cent would go to VSNL. These are mainly in the area of corporate services.

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