Verizon to kick off ILD services here
US telecom major Verizon proposes to set up international long distance (ILD) operations in the country.
By Vivek Sinha, TNN |
NEW DELHI: US telecom major Verizon proposes to set up international long distance (ILD) operations in the country. This will pitch it against foreign entrants such as AT&T and British Telecom as well as the existing incumbents— VSNL, Bharti, Reliance and BSNL.
The $75 billion Verizon will have to divest 26% stake to a domestic partner in its wholly owned Indian subsidiary— WorldCom Communications India (WorldCom) as a pre-requisite for getting an ILD licence. WorldCom, which was set up five years back is currently engaged in providing internet based telecom services in the country.
As per existing policy, foreign direct investment (FDI) for undertaking ILD services in India has a cap of 74%. Since Verizon holds 100% stake in WorldCom, it would need to divest its stake to an Indian investor to confirm with the FDI regulations.
Its global competitors AT&T has joined hands with Mahindras while BT has formed a JV with Bhartias of Jubilant for their Indian ILD telephony foray. At present, Verizon holds 100% equity in WorldCom through two arms— Verizon Asia Pacific Holdings and Verizon Hong Kong Ltd. Singapore based Verizon Asia Pacific Holdings would dilute its stake from 99.6% to 73.6% while bringing in the Indian partner.
Verizon’s decision to enter the ILD market in India follows the hike in FDI ceiling for telecom service companies from 49% to 74% along with relaxation of norms for ILD service providers.
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The entry of new players in ILD business follows some significant policy changes in license and entry fees along with other requirements for granting NLD and ILD licences. These were implemented to bring more competition in the long distance telecom market. Its entry into the ILD segment will mean that two of the leading telcos from the US— Verizon and AT&T—will slug it out in the Indian ILD market. WorldCom India was initially established to undertake activities such as ISP without gateways, training, web development and network integration. It was established by MCI-WorldCom combine, which was later acquired by Verizon in a multi billion dollar deal. Its original shareholders MFS Globenet Inc and MCI WorldCom Asia Pacific Ltd recently transferred their holdings to two other group concerns of Verizon.
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