Shubhendu Parth & Zia Askari
NEW DELHI: Dogged by wafer-thin margins, Data Access, an international long distance (ILD) service provider in India, is shutting its dial-up Internet access business (NOW ISP). The process to wind up its operations has been started and it is likely to be completed by the end of November 2004.
"The company has taken this decision because of the lack of returns in the dial-up line of business,"informed a highly placed source at Data Access, on condition of anonymity. According to sources, the decision to wind up the business was taken after the company did a review exercises couple of months back to ascertain the viability of this investment intensive business.
With its operations in all the major metros like–Delhi, Mumbai, Bangalore and Chennai, the company had initially grabbed a formidable share of the dial-up market. However, with a massive drop in its subscriber base–from more than 200,000 to 45,000, the company had been losing substantial money.
Sources also revealed that Data Access has already chalked out a plan to gradually withdraw its services. "We are not going to just shut our services abruptly, this whole process will be done in a phased manner. We have already started to send mailers to our subscribers, informing them about this decision," the source added.
According to Data Access, Managing Director, Siddhartha Ray, the decision is the result of the company’s business realignment. "The retail market with its low volume, low value growth has become non viable for us. On the contrary, we are growing strong in the ILD space as a global provider of international wholesale data and voice services. The decision to get out of the Internet access business would actually help us focus more on the carrier business and achieve our goal of reaching out to more last mile telecom operators," he said.
Ray also said that the company does not plan to renew its agreement with PCCW for the brand name ‘Now’, which the company had so far been using for its retail business. "The agreement for the use of the Now brand was to expire in December 2004 and we expect to wrap up the retail business soon," he added.
While the company had posted accumulated losses of Rs 98.6 crore as on September 30, 2002, these losses were primarily due to its ISP business, which has considerably gone down after it started ILD operations. In fact, for the first time in financial year 2003 the company reported profits of Rs 5.85 crore. Consequently, as on September 2003, accumulated losses were down to Rs 92.8 crore.
Reacting to the news Internet Service providers Association of India (ISPAI) president Amitabh Singhal said that he was not at all surprised by the company’s decision to shut down its dial-up services. "With bigger telecom companies making money out of every possible telecom venture, small and medium players would eventually be pushed out of the business as they are not in a position to continue with these non-viable business option," he said.
According to Voice & Data, Data Access (India) is the country's second largest ILD player with a revenue share of nearly 11 percent. At present, the company is carrying over 30 percent of India’s ILD traffic and operates several telecommunications licenses in India, the UK, European Union countries and US for voice, data and broadcasting services.
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