Teleglobe International of Canada is negotiating with the public sector Mahanagar Telephone Nigam Ltd (MTNL), the basic telecom services provider in Delhi and Mumbai, for a joint venture to provide Internet services in the two cities. The Indian telecom firm plans to float a separate subsidiary for the Internet business.
The Canadian telecom company was among seven telecom carriers that submitted bids in mid-October last year in response to a VSNL global tender for its regional hub project. The other bidders were the British Telecom-MCI combine, Cable & Wireless, the Global One consortium (comprising Sprint International, Deutsche Telekom and France Telecom), Hutchison Telecom, Telstra International and North American Gateway, an NRI company operating under the brand name NextAge. Senior MTNL officials said here they were "looking at the proposal" and would have to get clearance from the department of telecommunications (DoT) before taking a final decision on the proposal.
MTNL has proposed to DoT the floatation of a 100 per cent subsidiary for its new businesses like cellular and Internet services.
MTNL's rationale behind the proposed creation of a separate company to handle its value-added businesses is that it should keep its core business of basic telecom services separate from cellular and Internet services.
"There should not be any cross-subsidy between the two services," MTNL chairman and managing director S Rajagopalan had told Business Standard.
The MTNL proposal to spin off a subsidiary for value-added services is likely to be cleared as state-owned Videsh Sanchar Nigam Ltd (VSNL) has floated a 100 per cent subsidiary to separate its core international business from value-added offerings like Internet and data services.
A top MTNL executive said: "We are awaiting for DoT to issue licences for Internet services. Although the Delhi High Court ruled against the TRAI ruling, which besides barring entry into cellular services also turned down the government's Internet policy, private operators can still challenge the order and upset the whole process of deregulation of Internet services." MTNL is in the process of shortlisting vendors for supply of cellular equipment and will float tenders for supply of Internet service equipment too.
It is expected to adopt a two-stage evaluation process, comprising separate techno-commercial and financial evaluation.
On February 17, TRAI had struck down the cellular plans of MTNL, as well as the government's Internet policy.
The judgement was based on the regulator's interpretation of the TRAI Act, 1997 which allows it to arbitrate on disputes between telecom operators.
