VSNL , MTNL and Telecom Consultants India Ltd.(TCIL) have decided to jointly bid for telecom projects abroad. They will form a consortium and bid for opportunities in global markets in the areas of telecom and telephony and setting up international gateways.
VSNL (FY99 Income Rs 71.76 bn) is India's monopoly provider of international telephony services. It also provides telex and telegraph services as well as value-added services such as leased lines, e-mail, Internet and video conferencing.
MTNL (FY99 Revenues: Rs 52.47 bn), a public sector company, is a franchisee of the Department of Telecom. The company has a 15-year telecom license to operate in New Delhi and Mumbai until the year 2013.
MTNL and VSNL will be able to synergise their strengths to the maximum advantage. This will give added reach to both VSNL and MTNL, especially in view of the fact that their monopolies are being threatened in the Indian markets owing to the recent decision by the Department of Telecommunications to allow private telecom operators and Internet Service Providers (ISP's) to set up shop. This will also enable them to bid for large projects jointly, where bidding individually might be a constraint.
The main concern regarding this new venture pertains to the fact that this may lead to a thinning out of resources. This is worrisome in view of the rise in competition in the domestic markets. Large amounts of investment need to be made in India to setup infrastructure in order to improve the quality of services.
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