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Fight for ILD pie to see lower call rates

14-February-2004
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Fight for ILD pie to see lower call rates

The expiry of VSNL’s status (on February 14) as the preferred international long distance carrier and entry of BSNL into the space is all set to change the dynamics of the $600 million (4 billion minutes) composite ILD business in India. The outbound ILD market will open up for players like Reliance, Bharti and Data Access. “The developments offer a window for the other three players who are likely to get a portion of the BSNL traffic till the incumbent itself enters into bilaterals with international carriers. This could take anywhere between six to eight months,” said Data Access CEO Siddhartha Ray.

So far, inbound traffic accounted for 75 per cent of the international traffic. With the competition heating up now for the outbound traffic, the existing retail tariff varies from Rs 15.99 to Rs 24 is likely to fall to Rs 7.50 per minute in the next six months on all routes, except the Middle East.

The carrier margins will be under further pressure, according to Ray. “From the existing levels of 14 cents a minute, the margins may dip to below 4 cents,” said an analayst.

As the ILD players in India try to build up more global traffic, India has become a more attractive marketplace for international long distance carriers to enter into termination partnerships. According to Teleglobe Canada deputy chairman Serge Fortin, “India is very important for us — more from the revenue point of view but also as a traffic destination.” The company is the largest aggregator of ILD traffic in India and Data Access’ largest termination partner.

The international voice traffic in India is expected to register a compounded annual growth rate of 25 per cent.

As far as the Access Deficit Charges (ADC) are concerned, inbound ADC on ILD is expected to remain high as it effects foreign consumers. But the ADC for outbound international calls may drop rapidly given that it will benefit the Indian consumer and also generate volumes.

This is likely to change both the market share as well as the revenue ratio of inbound to outbound traffic for Indian ILD players. Presently, as far as voice traffic is concerned, VSNL has a market share of 37 per cent while Data Access and Bharti have a share of 35 and 18 per cent respectively. The balance is with Reliance.

It is expected that India and non-India traffic for ILD players will be equal in the next three years.

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