NEW DELHI: The Essar Group, has become the first major Indian business house to apply for national and international long distance telecom licences, after the announcement of a new policy in November this year, which substantially lowered entry barriers in the long distance telephony business.
When contacted, a senior Essar official confirmed the development and said the networks, which could cost over Rs 1,000 crore to set up, will be up and running in the next six months.

At present, the National Long Distance (NLD, popularly known as STD) market has four players: BSNL, Bharti, Reliance and VSNL, while VSNL is the market leader in International Long Distance (ILD or ISD).

In fact, Hutch and Essar are the only major mobile operators without captive long distance landline operations, a Rs 30,000 crore market, growing at 15% a year. … … Essar, the largest Indian shareholder of Hutchison Essar, recently acquired a controlling interest in BPL Comm at a value of over Rs 4,400 crore. The consolidation of BPL with Hutchison Essar makes it the country's second largest GSM mobile operator after Bharti, with over 13 million subscribers.

When contacted, Asim Ghosh, MD, Hutchison Essar India declined to confirm or deny whether Hutchison owned equity in both the licences, though DoT sources confirmed that Essar has applied for the licence under a different name.

According to the Essar official, the licences are solely owned by Essar and equity terms with Hutch have not been discussed.

Essar's foray into long distance follows the Bharti and Reliance model and will serve Hutchison Essar's mobile services across 17 circles in India. No surprise then, that Hutchison Essar has been leading an industry demand for a change in inter-circle connectivity rules to get around the large NLD fees for some time. … … The new licence terms has lowered entry barriers, by cutting the NLD/ILD combined entry fee of Rs 125 crore to Rs 5 crore, a revenue share reduction from 8% to 6% and a complete removal of rollout obligations. Essar benefits both from the improved licensing terms as well as the proposed implementation of the access code regime.

When implemented, this regime will allow the over 100 million telecom subscribers across the country to choose an NLD and ILD operator of their choice.