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Tuesday, Apr 26, 2005

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BSNL offer for ILD calls — VSNL loses 5 sectors to Reliance

Thomas K Thomas

New Delhi , April 25

RELIANCE Infocomm edged out the Tatas-managed Videsh Sanchar Nigam Ltd to emerge as the lowest bidder for carrying Bharat Sanchar Nigam Ltd's international long distance calls in five sectors even as the latter emerged the lowest bidder in the other six sectors.

The bids for all the 11 ILD sectors were opened on Monday by BSNL. Bharti Tele-Ventures had also submitted its bid for the project.

India's ILD market size is around Rs 4,300 crore of which BSNL's 42-million fixed line subscribers account for a significant share. The five sectors where Reliance emerged as the lowest bidder account for nearly 20 per cent of the country's ILD traffic. While VSNL has retained the heavy traffic zones such as the US and the UK, today's development may have negative revenue implications for the company. In the last year's bid, VSNL had lost out in these crucial sectors to Data Access.

BSNL had called for bids for carrying ILD calls from its subscribers to 11 sectors, which include Southeast Asia, the US, the UK, Canada, West Asia, Europe, Australia, New Zealand, Africa, Saudi Arabia and SAARC.

Last year, VSNL had bagged the contract for all the 11 sectors after thwarting the challenge from Data Access, which had quoted rock bottom settlement price of Rs 1.69 per minute. Though the tariff quoted this year by the companies is not known yet, global trends indicate a downward revision in tariffs.

BSNL is yet to award the contract. VSNL may make a counter offer for the other five sectors as well since the company's revenues have been on downswing over the last two years. BSNL has not awarded the contract yet. Last year, BSNL had invited bids for both carriage and settlement. This year, however, the company had invited bids only for the carriage part in some of the sectors. This is because it has worked out settlement rates on its own with international carriers in some sectors.

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