Videsh Sanchar Nigam Ltd (VSNL) has signed a Rs 500 crore deal with Bharti Tele-Ventures to share the latter’s national long-distance cable network for 15 years.
As a part of the agreement, the Tata-managed VSNL will have the right to use Bharti’s national long-distance backbone across 100,000 fibre km along 2,300 route km.
Every route km on Bharti’s network will have four strands of fibre for VSNL. This is approximately 20 per cent of Bharti’s total national long-distance capacity.
Rajan Bharti Mittal, joint managing director, Bharti Tele-Ventures, said: “Bharti has always been a strong advocate of sharing of infrastructure on mutually beneficial terms, so as to optimise investments. This applies not just to long-distance networks but also to other infrastructure like cell sites for mobile operations.” A quarter of Bharti’s mobile infrastructure is shared with competing operators.
Though both Bharti and VSNL are competitors, the deal is seen as win-win for the two companies. For Bharti the deal will enable it to utilise unused capacity, a reduction in operating costs and improvements in its cash flow.
For VSNL the agreement with Bharti will add to its existing infrastructure spanning over 6,000 route km, thereby extending its coverage to 200 long distance calling areas. VSNL also recently acquired Dishnet DSL’s broadband network. The deal with Bharti will give its broadband plans an immediate boost.
S K Gupta, managing director, VSNL said, “This agreement, along with our own submarine cable, will ensure that our enterprise and broadband subscribers get end-to-end connectivity on our robust Gigabit network.”
This will also bring down VSNL’s capital expenditure in meeting its national long-distance rollout obligation as required by its licence.
VSNL would have had to cough up over Rs 800 crore to set up its own cable infrastructure across 100,000 cable km. Bharti has invested nearly Rs 2,000 crore in its national long-distance network.
Bharti is also in talks with Bharat Sanchar Nigam Ltd to share long-distance infrastructure.