INDIA BUSINESS WORLD - AUGUST 2006
THE MONTH THAT WAS...

VSNL SLASHES INTL BANDWIDTH PRICES BY 40%

VSNL, owned by the Tata group, will build two submarine cable systems entailing an investment of $600m, to bridge the missing link in its global undersea cable business. In a move that could improve its market share, the telco has also slashed international bandwidth prices by up to 40%. The cable between India and Europe via the Middle East will cost around $350m. ET had first reported in its Thursday edition that VSNL was planning a submarine cable between India and Europe . It will be ready by early to mid ‘08. The second cable, from Singapore to Japan via Hong Kong , will require an investment of $250m and is expected to be operational by end ‘07.

“The new cable systems will help us complete the global picture of submarine cables. We are looking at partners for this investment. The whole amount ($600m) will not come from us. We are in discussions with various players for partnership,” VSNL executive director N Srinath told reporters in here on Thursday.

On bandwidth price reduction, effective September 1, Mr Srinath said the move will not affect the company's bottomline. “Rate cut will increase our market share,” he said. In India , VSNL is already the market leader in international private leased circuits (IPLC) and internet leased lines ( ILL ).

VSNL's IPLC prices have been reduced by up to 25% while ILL tariffs have been cut by up to 40%. The company had earlier slashed prices in March this year. Post reduction, the market for international and internet bandwidth is expected to expand as the reduced prices will encourage demand from new customer segments like SMEs, smaller ISPs and academic institutions, Mr Srinath added.