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Government rejects BSNL, MTNL, VSNL's fixed-line bids

The government has rejected applications by telecom giants BSNL, MTNL and VSNL for new fixed-line licences on grounds that three state-run entities cannot compete in the same business, a government official said on Friday.

"They are not eligible. As they are government entities, they cannot compete with their own brethren," a telecoms ministry official, who did not want to be identified said.

The three firms had applied for a total of 22 fixed-line telephone licences after the government threw open the business to unlimited competition earlier this year in a bid to lure private investment into the business, the official said.

Earlier rules allowed only one private firm to compete with an existing state-run player in each of India's 21 telecom zones.

Telecoms behemoth Bharat Sanchar Nigam Ltd is India's largest telecoms firm providing fixed-line services across the country except Bombay and New Delhi, which is the preserve of Mahanagar Telephone Nigam Ltd.

BSNL, which also operates the country's only long distance telephone service network, had applied for licences to provide fixed-line services in New Delhi and Maharashtra.

MTNL, India's largest listed telecoms firm, provides fixed-line, cellular and Internet access services in the cities of Bombay and New Delhi. The firm had applied for licences, all of them for areas where it would compete directly with BSNL.

The move will deal a severe blow to MTNL's plans of becoming a national telecom operator.

Videsh Sanchar Nigam Ltd, India's monopoly overseas telecoms carrier and its largest Internet access provider, was eyeing the fixed-line business in a bid to broaden its revenues, now heavily dependent on its international calls business.

The New York Stock Exchange-listed VSNL, due to be privatised by the government this year, is set to lose its monopoly over the overseas calls business in April 2002.

The government, which opened up the business in January, received 147 licence applications from various groups including the three state-run firms.

The official said the government has so far issued letters of intent or preliminary approvals to 48 licence applications.

These include 18 proposals by India's Reliance Group, 15 by the Tata group, seven by telecom equipment maker Himacahal Futuristic Communications Ltd and eight by New Delhi-based telecoms group Bharti Enterprises.

The fixed-line business has attracted a lot of interest as the government has allowed firms to offer a limited radius mobile service using the CDMA wireless in local loop technology.

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