Feeling the heat turned on by private sector players who have slashed rates, Videsh Sanchar Nigam Ltd said on Monday that it will review National Long Distance plans despite having commenced services in around 10 stations.
"We have to take a re-look at our NLD plans, especially since rates are falling. Business plans for NLD needs a constant review and dynamic updation", VSNL managing director S K Gupta told reporters at a book release function organised by the company in Mumbai on Monday.
The book, "The Story of Videsh Sanchar Nigam Ltd" was released by Tata Group non-executive chairman Ratan Tata.
Gupta said the entire exercise of NLD review would depend upon the traffic pattern and its viability in the future, but VSNL had no plans to shelve the project.
"We have already leased capacity from Gail India Ltd and Powergrid Corporation of India Ltd," the CMD said.
"As it is, the reduction in International Long Distance to Rs 6 and Rs 9 have squeezed both VSNL and MTNL, the outgo is the same as the income, Gupta said adding, this development had left the operators with a mere Rs 1.50 paise per call, depending where it terminates.
He said severe competition from private players like Bharti had pulled down VSNL's growth rate to a mere seven per cent in the last quarter over 15-16 per cent in Q3 FY'02.
"I have no hesitation in accepting that competition from other players have reduced our growth rate to seven per cent, Gupta admitted.
ILD services account for 79 per cent of VSNL's total revenues.
On the interconnect agreement with MTNL, Gupta said the boards of both the companies would meet before March 31 to review the agreement and shall also take recent changes in the rates into account.
The existing trends in tariffs have significantly hit VSNL's bottom line with its net profit falling by 77 per cent to Rs 81.8 crore (Rs 818 million) in the quarter ended December 31 as against Rs 357.2 crore (Rs 3.57 billion) in the same period of December 2001.
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