The Telegraph
Since 1st March, 1999
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VSNL selloff clause under scanner

New Delhi, Oct. 23: The government has asked legal eagles to examine the provision in the VSNL selloff agreement with the Tatas, under which Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL) are required to route their overseas call traffic through VSNL for two years.

The “preferred carrier” clause in the selloff agreement has come under the scanner because of the tense stand-off between VSNL and the government over the interconnect rate.

In February this year, the Tatas had picked up a 26 per cent strategic stake in VSNL for Rs 1,439 crore. Later, they raised their stake to 45 per cent through an open offer.

However, soon after the deal, the Tata-run VSNL fell foul of the government over two issues—the decision to invest Rs 1,200 crore in Tata Teleservices, and second, the revenue-sharing arrangement between BSNL/MTNL and VSNL over carrying overseas calls.

The first issue was resolved on Monday when the VSNL board agreed to scale down the investment in TTL to Rs 835 crore and increase the time-frame to seven years instead of the four years proposed earlier. But the sabre-rattling on the revenue sharing issue continues, with an amicable solution eluding the two.

VSNL says for all calls terminating at the BSNL/MTNL network and then carried on to the subscriber’s end, the latter will get Rs 4 per call; but for overseas calls originating from the BSNL/MTNL network and routed through VSNL, the Tata-run entity is demanding Rs 6 per call. BSNL and MTNL are miffed by this because Bharti’s IndiaOne is offering about Rs 3.30 each way as the revenue share.

On Tuesday, Mahajan had promised to keep an open mind and support the initiatives taken by VSNL to resolve the deadlock, even asking BSNL officials to co-operate in finalising the rates. But he also reiterated that the government will not allow an interconnect agreement with VSNL that will result in a revenue loss to BSNL and MTNL. While appreciating the efforts taken by VSNL to resolve the contentious issue, Mahajan said the market has shown that the revenue share demanded made by the two public sector telecom companies was justified.

Speaking on the sidelines of the Asia-Pacific Telecommunication General Assembly today, Mahajan said, “There is no deadline set by us. VSNL had raised two issues on interconnect—the definition of market rate and the impact of market rate on the company’s financials. We feel that these queries have legal implications. So, we have decided to discuss the issue with our lawyers. It may take about one week before the government can take a decision.”

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