The Hindu Business Line : VSNL volumes unchanged

THE year 2002-2003 could be Videsh Sanchar Nigam Ltd's most dismal fiscal so far, with international telephony traffic volumes handled during the year almost unchanged from that recorded during the previous fiscal.

When international settlement rates — and, consequently ILD tariffs — started to drop, it was expected that volumes would increase in compensatory fashion.

They did show a happy increase during the first two quarters of 2002-2003, but volumes started to peter out ominously during the third quarter ended December 31, 2003 itself.

The year ended March 31, 2002, saw the company's net profit fall over 20 per cent, although there was a 16 per cent increase in ILD traffic volumes.

Lower settlement rates led to a 28.5 per cent fall in the net profit for the first quarter of 2002-2003, year-on-year, although ILD volumes increased over 23 per cent.

The second quarter again saw a 33 per cent fall in net profit, despite volumes increase of 16 per cent.

By the end of the third quarter, the volumes rise for the nine-month period had come down to 7 per cent.

Now, officials at the company say, they have ended the year with stagnant volumes.

"Our volumes are almost unchanged for the year 2002-2003'' confirmed a senior official with the company. "We had been reporting annual volume increases of 16 per cent to 20 per cent for the last few years. That has not happened this year.''

The settlement rates have fallen to average 16 cents to 17 cents per minute of international call, whereas a year earlier the settlement rate was 34 cents per minute of international call.

"Yet volumes have not increased,'' said an official. He conceded that whatever increase might have ordinarily happened must have gone to the competition — competition from both new ILD players such as Data Access and Bharti, as well as from net telephony which offers rates as low as Rs 5 to Rs 8 per minute (to the US) and in the grey net telephony market, rates of even Rs 2 per minute.

Data Access, which started operations only last year, recently claimed an ILD market share of close to 40 per cent in the country; Bharti officials too, variously claim they have 10 per cent to 20 per cent of the market.

VSNL officials refused to disclose their market share. "We are not into looking at market share. In any case there does not exist any proper market share assessment,'' said a senior official with the company.

"It is natural that our market share will fall when there is competition introduced. And it is natural that volumes also could fall. We are taking steps to counter it.''

ILD revenues still account for around 80 per cent of the company's total revenues.

Earlier this week, VSNL had, along with three other Tata telecom concerns — Tata Teleservices, Tata Tele (Maharashtra) and Tata Internet Services — announced a common marketing and sales team.

Mr N Srinath, Director, Operations, VSNL, had said that this arrangement would help VSNL leverage the retail base of the other partners as well as that of its own Internet subscriber base of around seven lakh.

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VSNL volumes unchanged