TRAI outlines international telephony guidelines

NEW DELHI: Telecoms regulator on Monday recommended unlimited competition in

international long distance telephony, clearing the last hurdle for the high

profile privatization of state-run telecom giant VSNL.

The privatization of overseas telecom monopoly Videsh Sanchar Nigam Ltd., due

to be wrapped up by December, has been repeatedly delayed because of the lack of

rules supervising the private sector's entry into international long distance (ILD)

telephony.

The Telecom Regulatory Authority of India (TRAI) said in a statement it

recommended a one time non-refundable entry fee of Rs 250 million for a 20-year

international long distance (ILD) telephony license, and an unconditional bank

guarantee of a similar amount that would be released after roll-out plans were

met.

"In addition to the one time entry fee, ILD service providers shall be

required to pay an annual license fee including universal service obligation

levy...(at) 15 per cent of the adjusted gross revenue," the TRAI statement

said.

The license would be automatically renewed for a period of five years, TRAI

said, adding prospective licensees needed to have a net worth of Rs 250 million.

Analysts say the government, which plans to sell a 25 per cent controlling

stake in VSNL to a strategic partner and another 1.97 per cent to VSNL's

employees, may now get a lower price for its stake due to unlimited competition.

The guidelines would enable potential VSNL bidders to figure out how much it

would cost them to set up a green field ILD operation or set a price bid for

VSNL, analysts said. The government currently owns 52.97 per cent of the New

York Stock Exchange-listed VSNL, which is also the country's largest Internet

services provider.

VSNL's shares closed flat at Rs 254.85 on Monday on the Bombay Stock Exchange

whose main index ended with gains of 0.47 per cent.