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BSNL, VSNL call truce; deal likely on Tue

Thomas K Thomas in New Delhi

The six-month dispute between the Tatas-controlled Videsh Sanchar Nigam Ltd and Bharat Sanchar Nigam Ltd over the revenue-sharing formula in international long-distance services is set to end with the department of telecommunications saying on Monday that an agreement between the two sides is expected by Tuesday.

Vinod Vaish, chairman, Telecom Commission, told Business Standard: "BSNL need not sever its ILD ties with VSNL because a formula is being worked out on sharing revenue. We expect an agreement between the two sides tomorrow (Tuesday)."

Vaish, who was also secretary, department of telecommunications, said while BSNL was offering discounts to VSNL for carrying high-volume traffic, VSNL had also softened its position Last week, BSNL had sought permission from the ministry of communications to terminate its ILD agreement with VSNL if the latter did not offer better rates.

Subsequently, officials of the two firms held several meetings on Sunday as a last-ditch attempt to come to an agreement.

The negotiations went on late into Monday night and would continue on Tuesday. BSNL sources said while the broad framework of the deal had been worked out, the discussion is stuck on how much volume discount BSNL should give VSNL.

The controversy had arisen after VSNL lost its monopoly in ILD services from April 1. Private sector operators like Data Access, Reliance and Bharti entered the fray and offered much better commercial rates to BSNL for carrying ILD traffic from its 35 million subscribers.

While the private sector companies offered an average of Rs 7.18 per minute to BSNL for terminating incoming ILD calls, VSNL was prepared to give only Rs 4 per minute.

For outgoing calls, VSNL wanted Rs 13.80 per minute against an average rate of Rs 8.80 per minute being charged by other ILD operators.

BSNL's threat to terminate the agreement came when VSNL refused to match the rates being offered by other private operators because they were "uneconomical".

The controversy also forced Home Minister L K Advani to convene a meeting between Pramod Mahajan, Minister for IT and Communications, Arun Shourie, Minister for Divestment, and Jaswant Singh Finance Minister.

Ratan Tata, chairman, Tata Group, had also met Mahajan to resolve the crisis which was threatening VSNLs viability.

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