Unleashing a fresh round of price war in the long distance call segment, Mahanagar Telephone Nigam Ltd on Tuesday announced it would charge its landline customers Rs 1.20 for a three-minute call between Delhi and Mumbai.
The rate for calls between the two cities, which are 1,400 km apart, would come into effect from June 1, MTNL CMD R S P Sinha announced in the presence of Communications and IT Minister Dayanidhi Maran in New Delhi.
MTNL currently charges Rs 1.90 a minute for a call between Delhi and Mumbai thereby bringing down rates nearly by 375 per cent and the new tariff is comparable to local call rates.
The other telecom PSU Bharat Sanchar Nigam Limited charges about Rs 2.40 a minute for STD calls throughout India, except between Delhi-Mumbai, while private operators charge up to Rs 2.65 a minute.
Other operators are expected to follow suit to remain competitive in the lucrative Delhi-Mumbai market.
MTNL, which has the licence to operate only in the metros of Delhi and Mumbai, has 38 lakh fixed line users in both these cities put together.
Maran said this is an effect of policy decision by department of telecom to bring down the licence fee for NLD and ILD to a uniform Rs 2.5 crore (Rs 25 million) from Rs 25 and Rs 100 crore (Rs 1 billion), respectively.
MTNL, which launched its own STD operations between Delhi and Mumbai on Tuesday, has tied up with Tatas-owned Videsh Sanchar Nigam Limited for traffic carriage based on the lowest rates offered by VSNL.
"MTNL has been paying huge carriage charges for its calls routed outside Delhi and Mumbai. By tying up with VSNL, we shall be buying huge bandwidth capacity (4 STM1s) at a cost of Rs 2.64 crore (Rs 26.4 million) annually thereby saving Rs 8 to 10 crore (Rs 80 to 100 million) on cost," MTNL director (finance) Anita Soni said.
Maran said that DoT has received as many as 16 applications for NLD licenses and two companies have been issued letter of intent, while MTNL was given the licence.
Railtel and Power Grid have been given the LoI, the minister said, adding that six companies have applied for ISD licences.
According to figures released by MTNL, the company earns between Rs 100 and 150 crore (Rs 1 billion and 1.5 billion) revenue from STD calls between Delhi and Mumbai which registers about 12 crore (Rs 120 million) STD minutes with 80 per cent of them made from fixed line phones.
MTNL is also setting up its own infrastructure on viable routes in a phased manner and for rest of the country it has invited bids from traffic carriers like Bharti, VSNL, Reliance and BSNL and traffic would be routed based on lowest carriage charges.
The companies would be submitting the bids by Tuesday evening and Wednesday.
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