The Hindu Business Line : VSNL woos cell operators — Goes a long distance to shore up revenues

FACED with steadily declining revenues from its international voice services, telecom major Videsh Sanchar Nigam Ltd (VSNL) is now wooing the private cellular operators to wean their long-distance traffic away from competitors Bharti Telesonic Ltd and Data Access Ltd.

At present, while the entire outgoing ISD traffic of Idea Cellular is on VSNL's network, private cellular operators Hutch and BPL Cellular have an understanding with Data Access and the remaining operators (including of course AirTel) are utilising Bharti's international long distance (ILD) network. As regards the STD traffic, all of them have latched on to the national long distance (NLD) network of Bharti. According to industry sources, VSNL is now trying to mop up the entire cellular ISD and STD traffic, barring that of AirTel in an effort to shore up its revenues and regain lost ground.

One round of meeting with the operators has already been concluded and further negotiations are pending before a deal can finally be inked. While for the ISD traffic it would be a blow to Data Access, in the STD segment the move is likely to hurt Bharti.

The sources noted that for the present, VSNL has offered ISD rates at as low as Rs 6 per minute for calls to the western region to the cellular operators who will be then free to charge any suitable rates to their customers and pocket the difference.

This is exactly the business model that Data Access, a wholesale carrier has been adopting. Bharti has a different arrangement for its ISD calls based on 30 per cent revenue sharing.

As regards the STD segment, it is a different game altogether. VSNL has already set up a network in 12 cities across the country, and is yet to officially launch its services. Since it cannot depend on the landline traffic of BSNL (which has its own NLD network), the only option is to woo the private cellular operators.

According to sources, the company is considering undercutting Bharti's STD rates by close to 50 per cent and adopting the same model as it is doing for the ISD calls.

In other words, give the freedom to cellular operators to decide on the price to be charged from the customers. If it works out, most of the cellular traffic may soon shift away from the Bharti network, unless of course it retaliates with a more attractive offer, the sources said.

While VSNL officials were unavailable for comment, officials from Bharti noted that the company would not be affected on the ILD revenues front. Not just because their agreement with the other cellular operators is on a revenue-sharing basis, but also because data, not voice, will dominate the income from these services.

With regard to the STD cellular traffic, they noted that VSNL is yet to give a suitable offer to the cellular operators and nothing can be said about it at the moment. In any case, Bharti would continue to retain the mobile-to-mobile (M2M) STD traffic.

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