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September 19, 1997


VSNL's invitation for hubbing work questioned

Some Indian telecom companies, interested in setting up a regional hub along with the Videsh Sanchar Nigam Limited, are unhappy that the VSNL has not invited the Indian companies to participate in the venture.

The government-owned long-distance carrier had sent out 'request for proposals' on August 14, 1997, only to a few select long-distance carriers.

The 'selection' of these carriers is now being questioned and at least one Indian company has written to VSNL, asking it to issue an RFP to it as well.

It is being pointed out that the selection of the companies to whom RFPs were sent was entirely arbitrary with Indian companies left out in the cold. Some of them said that they had come to know of the issue of the RFPs only through media reports.

However, it is understood that VSNL is yet to reply to the request of these companies. Among these Indian companies are large corporate houses who already have an interest in the basic and value-added telecom services.

These companies are saying that they would have eventually entered the long-distance market when the monopoly of DoT and VSNL over domestic and international long-distance come up for review in 1999 and 2004, respectively.

They point out that the company eventually selected as the partner for the Rs 15-billion regional hub project would have an edge over the others when these markets are thrown open.

They argue further that, by not inviting any Indian company to submit proposals for the venture, VSNL has further, and rather unfairly, narrowed the field.

At no point in the RFP has VSNL stated the criteria for shortlisting the companies to whom the RFPs were sent out. One of the arguments being put forth is that if VSNL was looking for foreign carriers to bring the substantial traffic required to make the hub viable, Indian companies could have roped in their current partners in the basic and cellular ventures.

Another point being raised is that VSNL should have floated a global tender for selection of a partner, given the size and significance of the project.

Another development is that VSNL is likely to turn down requests for an extension of the September 26, 1997, deadline for submission of proposals.

Several European, American and Far Eastern carriers to whom RFPs were issued are understood to have written to VSNL, explaining that six weeks are too short a period in which to submit a proposal for a Rs 15-billion project.

German Federal Minister of Post and Telecommunications Dr Wolfgang Botsch, during his recent visit to India, had told his Indian counterpart Beni Prasad Verma that the September 26 deadline was far too short for German companies such as Deutsche Telecom to submit a proposal.

Companies which have been invited to submit proposals say that while they are interested in participating in the project it would take them several months to submit a proposal.

Adequate market research would be required before a company can commit itself to a Rs 15-billion venture. One of the companies pointed out that, if VSNL failed to extend the September 26 deadline, only one company - namely British Telecom - which has been actively pursuing the project for more than a year, would be able to submit a detailed and accurate proposal.

Companies are also unhappy that evaluation criteria - such as the level of traffic that a carrier would bring to the joint venture or any technical criteria - have not been stipulated.

The request for proposal asks for an applicant's annual turnover, market share in regions of operation and percentage of revenues derived from overseas ventures but at no point does it specifically say that these would be evaluation criteria.

Even if this was implied, no weightage has been assigned. The RFP says that one of the aims of establishing a hub is to encourage Indian manufacture of telecom equipment. Since this would require technology transfers and plant upgradation of Indian manufacturers, the RFP asks applicants if they are interested in establishing R&D centres in India. But there is no indication as to how each of these various aspects will be evaluated by VSNL.


- Compiled from the Indian media

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