BT-MCI to dilute regional hub plan

NEW DELHI, July 16: British Telecom-MCI plans to water down its original proposal for the strategic alliance with the Videsh Sanchar Nigam Limited (VSNL) for a Rs 1,800 crore regional hub for routing international telephone call traffic. This comes in the face of stiff opposition from the Telecom Commission (TC) to the original proposal – it has already been rejected on three occasions in the past. Apart from offering to lower BT-MCI’s equity stake in the proposed alliance from 40 per cent to 35 per cent, it also proposes to scale down the "terrestial links" to the bare minimum. This, according to BT officials, would help take care of a substantial part of the apprehensions expressed against the project so far. In the new proposal, other members of the consortium will now be Infrastructure Leasing and Financial Services with a 20 per cent share and Marubeni of Japan with another 10 per cent — VSNL’s share will be 35 per cent.

While senior TC officials said they had not received any new proposal, TC Chairman A.V. Gokak pointed out that the policy on setting up of regional hubs was still being finalised. Even after it is finalised, he added, the Government would make all attempts to get proposals from all global majors before any decision is taken. The final choice of partner, Gokak said, would be taken at the highest level in the government. Apart from the objections to the high foreign equity in the project, the main objection to the project relates to the "terrestial links". Under the original proposal, BT-MCI-VSNL would set up networks to connect all major cities in the country, apart from the four metros where it would access international markets through VSNL’s gateways.

The Telecom Commission had stated that this would give BT-MCI-VSNL a distinct advantage vis-a-vis private operators of basic telecom circles, as and when the country opened up its domestic long distance traffic to the private sector — likely, in another 2 years. At this point, the strategic alliance would already have a network laid out and would only require to get interconnectivity to start long distance services. Also, private operators would also not be willing to invest huge sums of money in setting up telecom networks in states or paying huge license fees since BT-MCI-VSNL would be best positioned to grab the long distance market.