The Ruias-promoted Essar Teleholdings has floated a wholly owned subsidiary to offer international long-distance services.

The subsidiary, Essar Spacetel Ltd, has sought a licence from the department of telecommunications.

Essar will be the fourth international long-distance operator in the country after Videsh Sanchar Nigam Ltd, Data Access, Bharti Telesonics and Reliance Infocomm.

"With the mobile subscriber base growing and long-distance traffic moving from fixed lines to mobile telephones, we will consider this our target market," an Essar executive said.

He, however, added the move had not been finalised. "The application for licence is only an expression of intent. We are studying the market before a view is taken," he said.

Though the company is tight-lipped about the investment planned in the venture, analysts pointed out that international long-distance operations could require an investment of around Rs 100 crore (Rs 1 billion).

The international long-distance market in the country is estimated to be around 3.5 billion minutes, or Rs 7,000 crore (Rs 70 billion), a year. Of this, VSNL has the major share but is fast losing out to Data Access and Bharti.

Reliance Infocomm has still not begun commercial services though it is offering international long-distance services to its own limited mobility subscribers.

Long-distance traffic on mobile networks has increased in the recent past to nearly 25 per cent of the total market due largely to falling tariffs.

If Essar decides to take a plunge in international long-distance, it will be its second venture in the telecom sector. It already has a joint venture with Hong Kong-based Hutchison to offer cellular services under the Hutch brand.

Analysts pointed out that Essar's move could be aimed at becoming an integrated player.