BSNL, MTNL may tie up for cable link

At present, both PSUs use VSNL for international traffic.

Even though merger talks between Bharat Sanchar Nigam Ltd and Mahanagar Telecom Nigam Ltd have been put on the back-burner, the government is exploring the possibility of forming a joint venture of both the state-owned PSUs for setting up submarine cable links for International Long Distance (ILD) service.

BSNL and MTNL executives said both the PSUs were yet to finalise the equity ratio of the JV, but added that the new company would undertake all activities including issuing of tenders, awarding contracts and operating the undersea cables.

The move also forms part of the strategy of both the PSUs to have their own infrastructure and foray into the Rs 4,200 crore international long distance market. BSNL's board had earlier indicated that the company preferred its own independent ILD network as it would help it lower tariffs further.

BSNL has already chalked out plans to enter the ILD sector by 2006. As the first step, the PSU had recently signed a deal with Japan-based NEC Corporation for a 320 km under sea cable connecting Tiruchendur in southern Tamil Nadu and Colombo in Sri Lanka.

This implies that the first undertaking of the JV is likely to involve both the India-West Asia and India-Singapore undersea cables, which are currently being planned by BSNL.

BSNL executives added that the Chennai-Singapore and Mumbai-Dubai cable projects had already reached the planning stages, and were slated to be operational by 2008. The undersea connectivity project to Singapore and Dubai is estimated to cost over Rs 1,200 crore.

Currently, a large chunk of the ILD traffic of both PSUs is routed through the Tata-owned Videsh Sanchar Nigam Ltd (VSNL). Although private players such as Reliance and Bharti now offer international bandwidth, VSNL continues to account for most of the traffic on account on an agreement with the government, when the latter had disinvested its stake to the Tata group.

Considering that all major international cables have landing stations at Dubai, Singapore and Colombo, and that most of them have surplus capacities, both the PSUs feel that having their own infrastructure would enable them to directly negotiate better commercial terms with international operators.. Calling Self service

Equity ratio of the new company is yet to be finalised

The new company will undertake activities including issuing of tenders, awarding contracts and operating the undersea cables

Move is part of the strategy of both PSUs to have their own infrastructure and to foray into the Rs 4,200-cr international long distance market