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VSNL reviewing cellular entry plans

Videsh Sanchar Nigam Ltd is reviewing plans to enter cellular telephony following a recent order by the country's telecom regulator supporting limited mobility for fixed-line phone firms.

Earlier this month, the Telecom Regulatory Authority of India (TRAI) asked the government to permit fixed-line phone firms to offer limited mobility. The government is yet to decide on the suggestion.

Limited mobility will allow fixed line firms to offer mobile access in a limited area at a fraction of the tariff charged by cellular firms.

"We had more or less come to a conclusion to bid for the fourth (cellular) operator licence. But with this announcement, we will have to re-evaluate our plans," VSNL chairman and managing director S K Gupta told a news conference.

Gupta said limited mobility by fixed line firms could hit the viability of the country's cellular business.

The regulator's orders have upset cellular phone firms who say that limited mobility could adversely affect the flow of fresh investments into the mobile phone business.

The government recently announced the start of the process to award licences for a fourth cellular operator in the four metros and 17 circles into which the country's telecom market is divided.

State-owned VSNL, the country's monopoly overseas telephony provider and the largest Internet service provider, was among several local and overseas firms hoping to enter the fast-growing cellular business.

A vast majority of cellular phone subscribers make only local calls and mobile phone firms fear that limited mobility could lead to these customers jumping ship.

Eyeing other areas

Gupta said VSNL was eyeing domestic long-distance telephony and direct-to-home broadcasting as areas for future diversification, but did not give any timeframe.

VSNL has been promised a free licence to enter the domestic long distance (DLD) telephony business in exchange for ending its monopoly over international voice traffic two years ahead of schedule in April 2002.

The New York Stock Exchange-listed firm gets 90 per cent of its revenues from international voice telephony.

Gupta said the DLD business was expected to cost VSNL around Rs 14 billion over the next 3-4 years.

He said the firm would consider entering all telecom-related businesses, including fixed line telephony.

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