Close on the heels of mobile operators slashing their STD rates, state-owned Bharat Sanchar Nigam Ltd and Mahanagar Telecom Nigam Ltd on Tuesday cut STD rates to lower the mobile-to-mobile call charges from a peak of Rs 9 a minute to Rs 4.80 a minute.

BSNL said it would now charge Rs 4.80 per minute during peak hours for mobile-to-mobile calls and mobile-to-fixed line calls for distances beyond 500 km from Rs 9 earlier. Mahanagar Telephone Nigam Ltd said it would charge Rs 2.90 per minute for mobile-to-mobile phone calls for distances beyond 50 km from Rs 9 earlier.

The two state firms account for some 10 per cent of the total mobile subscriber base of over 10 million customers. India's nine-year-old mobile industry, one of the fastest-growing markets globally, offers the world's lowest cellular charges for local calls.

Joining the tariff war for market share, the two public sector telecom units said these rates would still be cheaper than private cellular operators who were charging separately for airtime in addition to call rate of Rs 2.99 per minute.

Announcing the new tariff package which remains unchanged for STD calls below 500 km, Prithipal Singh, Chairman and Managing Director of BSNL, told reporters that domestic long-distance calls made from cellular to fixed line phones would also be charged at the new rates.

He said the telecom giant was reworking its national long-distance tariffs and would approach the Telecom Regulatory Authority of India with a new tariff package.

The BSNL rates are likely to be passed by the Telecom Regulatory Authority of India very soon, said Prithipal Singh.

The fresh round of price war was triggered after major mobile operators last week announced a cut in their STD rates from the peak rate Rs 9 a minute to a flat cell to cell Rs 2.99 a minute.

But BSNL says that the actual rate for such a call from mobile-to-mobile is much higher than what is being stipulated by the private players.

It argues that the Rs 2.99 per minute will also include another Rs 2 as the average outgoing airtime rate for that minute. "This would mean that the cost would be Rs 4.99," a BSNL official said.

Bharat Sanchar Nigam Ltd has claimed it offers the cheapest cell-to-cell national long-distance tariffs to its CellOne subscribers at Rs 2.40 per minute for calls made beyond 500 km.

The company charges only the airtime from its 750,000 cell subscribers and has waived the long-distance component for calls beyond 500 km.

"The tariff announced by cell firms still charges Rs 2.99 a minute over and above the airtime charges of the average Rs 2 a minute. We charge only the airtime of Rs 2.40 a minute from our subscribers," a senior BSNL official said.

BSNL is also offering free incoming calls from its own fixed-line subscribers.

However, if BSNL extends the low tariffs to all national long-distance calls made from its network, it stands to lose a major chunk of its Rs 12,500 crore (Rs 125 billion) revenue from long-distance calls.

With national long-distance rates falling, their share of revenue is also decreasing hitting their bottomlines.

Minister for Communications Pramod Mahajan recently said this was the first instalment of the new rates and the industry would announce more concessions on a weekly basis to 'kill rivals in instalments.'

Additional inputs: A Correspondent in New Delhi, Reuters