The Hindu Business Line : As pvt players wait in the wings

ALTHOUGH the national long distance (NLD) operations are soon to be the hotbed of competition, with Bharti, Videsh Sanchar Nigam Ltd (VSNL) and Reliance looking at ways to seize market share away from incumbent Bharat Sanchar Nigam Ltd (BSNL), the public sector major is yet to get its act together on this front.

For one, despite being corporatised close to two-and-a- half years ago, the company has not separated its revenue streams from basic and STD operations - the first step towards effectively taking on the challenge from the private operators.

While BSNL has been concentrating on its cellular operations to take on the competition from private operators, not much attention has been paid to the STD sector where it already has a strong presence.

According to official sources, BSNL continues to assume that 30 per cent of its total revenues accrue from the STD calls made by its subscribers. A figure that has remained unchanged, despite the change in market dynamics and two sharp revisions in tariffs over the past couple of years. While the total income from services for the year 2002-03 has been placed at around Rs 20,000 crore, the company has "assumed" that Rs 6,000 crore is on account of the STD services.

The sources noted that at the time of its corporatisation in October 2000, the Department of Telecommunications had required BSNL to separate its revenue components since the licence fees payable for basic and STD services are different.

As per its guidelines, the annual licence fee for basic telephone service is payable at the rate of 12 per cent, 10 per cent and 8 per cent of adjusted gross revenue (AGR) for category A, B and C circles respectively.

Since BSNL provides basic services throughout the country across these categories, it has to pay the licence fees at the three applicable rates. For NLD services, the licence fees are payable at 10 per cent of AGR plus prescribed contributions towards the universal service fund (USF), which is currently 5 per cent of AGR.

The company still does not have a system in place for separating its revenues category-wise, the sources noted.

Being the incumbent operator, with a near monopoly on the basic and STD market, BSNL did not separate its revenue streams. It instead chose to provisionally assess the revenue from NLD services at 30 per cent of the total revenue, and use the same for calculation of licence fees. The DoT has now once again mandated that separate revenue streams ought to be provided for licence fee calculation, the sources said.

This has become all the more important because with falling tariffs, the STD traffic volumes have also changed, although they have not kept pace with the expectations.

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