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Vsnl Revenues Likely To Increase 10 Per Cent


The earnings of Videsh Sanchar Nigam Ltd (VSNL, the country's international telecom services provider) are likely to rise following a 10 per cent increase in revenues if TRAI's tariff proposals are implemented.

It may, however, have to reshedule its capital investment plans to handle increased traffic, as Indian international telecom rates and leased line charges get reduced and become competitive on an international scale.

TRAI wants to reduce international tariffs between 20 and 55 per cent over a three-year period. Said VSNL's acting chairman and managing director Amitabh Kumar: "We had suggested a 30 per cent drop in tariffs to TRAI. This (20-50 per cent) decrease will be beneficial for us and will increase our outgoing international call-minutes as much as 50 per cent." Last year, the carrier recorded some 400 million minutes of outgoing calls.

The Rs 5,300-crore VSNL is protected by a revenue-sharing agreement with DoT in the next three-four years and is expected to benefit from increased traffic in later years.

It is shielded against a decrease in international tariffs or changes in telecom accounting rates (shared between international carriers to orginate and terminate a call) with DoT under the terms of which it earns Rs 10 a minute for every minute of traffic it handles.

However, sources did not rule out pressure from DoT to revise this agreement. In the long-term, they expect the traffic of VSNL to increase enough to make up for a shortfall in revenues.

In 1996, the telecom carrier had proposed to DoT to reduce telecom accounting rates and as a result scale down international telecom tariffs. Analysts have been projecting a 20-plus per cent international traffic growth -- despite stagnant outgoing minutes -- in India which the company is expected to benefit from although its monopoly may be withdrawn before 2004.

Significantly, coupled with a TRAI proposal to reduce leased line charges, the cost of doing international business in India is expected to come down substantially if the TRAI proposals are carried through.

First Published: Thu, September 10 1998. 00:00 IST