Financial Daily from THE HINDU group of publications
Wednesday, Aug 31, 2005
Info-Tech - Telecommunications
Race for BSNL's ILD contract may hot up Domestic cos vying with foreign majors
Thomas K. Thomas
New Delhi , Aug. 30
DOMESTIC operators are taking on the might of foreign telecom giants in the race for cornering the multi-million dollar international long distance services contract from state-owned Bharat Sanchar Nigam Ltd (BSNL).
On one hand France Telecom, Telecom Italia and FLAG Telecom have individually expressed interest to participate in a global tender floated by BSNL for offering international bandwidth, Indian private telecom operators Reliance Infocomm, Bharti Tele-Ventures and the Tata-managed Videsh Sanchar Nigam Ltd are also serious contenders in the slugfest for one of the biggest contracts in the ILD segment.
BSNL had invited bids from carriers who could offer international bandwidth through optical fibre cable and satellite links. In response, it received expression of interest from seven companies, which were opened on August 26.
BSNL will shortlist the successful companies from among them after which the carriers would be asked to submit their financial bids. The move is in line with BSNL's strategy to offer ILD services independently.
As part of this strategy, the company is also laying its own undersea cable starting with a link to Sri Lanka.
"In order to provide its ILD telecom services independently, BSNL requires international bandwidth on optical fibre submarine cable system (OFSCS) and Satellite media from eligible Indian ILD operators, foreign carriers and other international bandwidth providers. Expression of interest was invited to empanel eligible bidders to supply, commission and maintain international bandwidth in order to enable BSNL meet the demand for international bandwidth for its ILD Voice, IPLC and Data services," said a senior BSNL official. The agreement with successful bidder will be for a two-year period.
The entire process is likely to be completed within the next two months. BSNL, with nearly 55 million telephone subscribers, account for ILD traffic worth more than Rs 4,000 crore every year. Analysts pointed out that Indian carriers, with ownership of over 6 major under sea cables, have become a force to reckon with in the international bandwidth segment.
Until now BSNL's ILD traffic was being routed through VSNL. Though VSNL's monopoly ended in 2002 when the Government opened up the sector to other players, a significant part of BSNL's ILD traffic was being routed through VSNL's infrastructure owing to an agreement with the Government at the time of divesting stake to the Tata group.
The BSNL board has, however, been wanting to break away from this relationship for quite some time on the grounds that it could get better commercial terms from other carriers on the basis of competitive bidding.
The new tender would put in place a permanent ILD network for BSNL comprising undersea cable operators and satellite service providers. BSNL will also now directly negotiate the settlement rates with the international carriers and also own the switches, gateways and the landing stations required to operate an ILD network.
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