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Teleglobe International of Canada is negotiating with Mahanagar Telephone Nigam Limited for a joint venture to provide Internet services in New Delhi and Bombay.

MTNL, a public-sector company, has monopoly over basic telephony services in the two metropolises. It plans to float a separate subsidiary for the Internet business.

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The Canadian telecom company is among the seven telecom carriers that submitted bids in mid-October last year in response to a VSNL global tender for its regional hub project.

The other bidders were the British Telecom, Cable & Wireless, the Global One Consortium (comprising Sprint International, Deutsche Telekom and France Telecom), Hutchinson Telecom, Telstra International and North American Gateway and an NRI company owning the brand name NextAge.

Senior MTNL officials say they are "looking at he proposal" and would have to get clearance from the Department of Telecommunications before taking a final decision on the proposal.

MTNL has proposed to DoT the flotation of a 100 per cent subsidiary for its new businesses like cellular and Internet services.

MTNL's rationale behind the proposed creation of a separate company to handle its value-added businesses is that it should keep its core business of basic telecom services separate from cellular and Internet services.

"There should not be any cross-subsidy between the two services," MTNL Chairman and Managing Director S Rajagopalan has made clear.

The MTNL proposal to spin off a subsidiary for value-added services is likely to be cleared as state-owned Videsh Sanchar Nigam Limited has floated a 100 per cent subsidiary to separate its core international business from value-added offerings like Internet and data services.

A top MTNL executive warned "We are waiting for DoT to issue licences for Internet services. Although the Delhi High Court ruled against the TRAI ruling, which besides barring entry into cellular services also turned down the government's Internet policy, private operators can still challenge the order and upset the whole process of deregulation of Internet services."

MNTL is in the process of finalising vendors for supply of cellular equipment and will float tenders for supply of Internet service equipment too.

It is expected to adopt a two-stage evaluation process, comprising separate techno-commerical and financial evaluation.

On February 17, TRAI had struck down the cellular plans of MTNL, as well as the government's Internet policy.

The judgement was based on the regulator's interpretation of the TRAI Act, 1997, which allows it to arbitrate on disputes between telecom operators.

- Compiled from the Indian media

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