Reliance gets Mtnl’s Long-distance call

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Almost three months after receiving the bids, Mahanagar Telephone Nigam Ltd (MTNL) has issued a letter of intent (LoI) to Reliance Communications Ventures Ltd for carrying its domestic long-distance traffic, other than between Delhi and Mumbai, it is learnt.

The NLD project with Reliance will be implemented in phases, it is believed. To begin with, Reliance will carry the long-distance traffic of MTNL that terminates in the Reliance network.

Meanwhile, MTNL continues to negotiate with its sibling Bharat Sanchar Nigam Ltd (BSNL) for carrying NLD traffic on some routes at better rates.

Besides Reliance, two others—Bharti Airtel and Videsh Sanchar Nigam Ltd (VSNL)— had bid for MTNL’s national long distance (NLD) tender. According to an MTNL official, Reliance emerged as the lowest bidder.

The deadline for receiving the bids was May 24.

MTNL chairman and managing director RSP Sinha had recently told reporters that, “inviting bids is purely a commercial decision to get best rates for carrying and delivering our STD traffic.”

Having bagged an NLD licence recently, MTNL has started carrying the traffic between Delhi and Mumbai itself on bandwidth leased from VSNL.

Under the new arrangement, MTNL slashed its Delhi-Mumbai calling rates (on landline) from Rs 1.90 per minute to Rs 1.20 per three minutes on a three-minute pulse from June 1.

So far, BSNL had been carrying the national long-distance traffic of MTNL on all routes, including the lucrative Delhi-Mumbai sector.

Interestingly, when MTNL floated its national long distance telephony tender, BSNL stayed away from bidding. However, negotiation between the two telecom PSUs has been on all along.

It is understood that MTNL’s NLD traffic translated into business of around Rs 900 crore per annum for BSNL.

On an average, BSNL charges 65 paise per minute for carrying MTNL’s NLD traffic. And, MTNL found the rate steep, subsequently leading to its NLD tender.

Through competitive bids, MTNL wanted to save around Rs 400 crore per annum on carriage of NLD calls.

However, MTNL cannot do away with BSNL altogether as BSNL’s telecom network is the widest across the country.

BSNL is the only operator providing connection to the remotest parts of the country.

In India, the total NLD business is worth around Rs 4,000 crore per annum, out of which Rs 1,000 crore is for the Delhi-Mumbai sector alone.