MTNL issues LoI to Reliance

Mumbai: Mahanagar Telephone Nigam Ltd (MTNL) has issued a letter of intent (LoI) to Reliance Communications Ventures Ltd for carrying its domestic long-distance traffic, other than between Delhi and Mumbai. This comes almost three months after receiving the bids.

The National Long distance (NLD) project with Reliance is expected to be implemented in phases. To begin with, Reliance will carry MTNL's long-distance traffic of that terminates in the Reliance network. MTNL is also in talks with Bharat Sanchar Nigam Ltd (BSNL) for carrying NLD traffic on some routes at better rates.

Bharti Airtel and Videsh Sanchar Nigam Ltd (VSNL) had also bid for MTNL's NLD tender. The deadline for receiving the bids was May 24.

MTNL leased bandwidth recently from VSNL to carry the Delhi-Mumbai traffic after securing an NLD licence, and slashed calling rates on landline from Rs 1.90 per minute to Rs 1.20 per three minutes on a three-minute pulse from June 1. BSNL had so far been carrying the national long-distance traffic of MTNL on all routes, including the lucrative Delhi-Mumbai sector.

On an average, BSNL charges 65 paise per minute for carrying MTNL's NLD traffic. And, MTNL found the rate steep, subsequently leading to its NLD tender.

However, MTNL cannot do away with BSNL altogether as BSNL's telecom network is the widest across the country.

BSNL is the only operator providing connection to the remotest parts of the country.

In India, the total NLD business is worth around Rs4,000 crore per annum, out of which Rs1,000 crore is for the Delhi-Mumbai sector alone.