Times are tough for India’s preeminent national telecom provider Videsh Sanchar Nigam Ltd [VSL] as it struggles to come to terms with increased competition in a market it once had an almost exclusive stranglehold on.
The carrier is struggling on several business fronts, not least its international long distance (ILD) telephony business, which, for the first time ever, returned lower call volumes (in minutes) for the first half of its current fiscal year compared to the earlier half of the year. VSNL declined to give exact figures, but the drop is though to be substantial.
Overall, VSNL is experiencing a worrying downward trend in its ILD business, reporting flat growth in annual volumes after several years of steady growth around the 20% mark.
VSNL blames the entry of new competition into the ILD sector, specifically emerging Internet telephony service providers, as a cause for the sudden dip. VSNL’s expectations that lower ILD tariffs would broaden the market and address absolute volume for all players has also not materialized.
VSNL’s national long distance (NLD) business is also showing signs of cracking. The company has established 100 points of presence in India, but has still to sign interconnect agreements with the other two leading players – Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd (BSNL). Thus far only a few private operators have forged agreements with VSNL.
VSNL’s long distance services also remain uncompetitive on the retail front due to the lack of a carrier access code that allows end users to choose their ILD or NLD provider.
Meanwhile VSNL’s ISP services, which promised high growth a couple of years ago, has only garnered 700,000 subscribers after eight years and remains under-serviced by a paltry 22 cities across India. BSNL meanwhile has already amassed over 750, 000 subscribers.
But its not all doom and gloom. VSNL saw strong sales in leased lines and some other services. The company says it will concentrate on corporate clients, possibly entering the field of corporate Internet Protocol-Virtual Private Networking (IP-VPN) following its acquisition of Gemplex Inc, a US IP-VPN provider this summer.
However some analysts remain skeptical about this strategy, stating that other international telecom carriers have moved out of the VPN business which they regard as best left to companies that specialize in only VPN and allied solutions.
This article was based on material originally published by ComputerWire.