NEW DELHI: Even as Hutch has consolidated control of its joint venture wireless operator Hutch Essar (HEL) by acquiring Hinduja TMT's 5.11% stake in the company for $550m, its junior partner Essar has scored a point by obtaining a letter of intent (LoI) from the department of telecommunications (DoT) for providing long distance services both within and across the national borders.

Hutch Essar's application for national long distance (NLD) and international long distance (ILD) licences has not been approved. Essar is exploring the option of going solo for these services.

"We have not yet decided whether we will go alone or will work with HEL, said Vickers Sara, CAE, Essar Teleholdings. The company applied for the licence under a company called "Shippingstop.com.

HEL is the third largest GSM mobile service provider in the country after Bharti and BSNL. It operates services in Mumbai, Delhi, Kolkata, Chennai, Gujarat, Andhra Pradesh, Karnataka, Punjab, Haryana, UP (E) and UP (W), Rajasthan, Maharashtra, West Bengal, Kerala and Tamil Nadu. It had a total subscriber base of over 1.6 crore as of May '06 and accounted for about 22% of the total GSM market in terms of subscribers.

The company's own subscribers ensure it of a large amount of long distance traffic. Currently, it diverts this traffic to various NLD operators like Bharti, Bharat Sanchar Nigam (BSNL) and Videsh Sanchar Nigam (VSNL). HEL has to give high carriage charges to them. Bharti, Reliance and Tata have their own ILD and NLD networks.

HEL desires to carry its own long distance traffic. However, DoT has not yet approved its application as the company has not yet submitted all the documents required by the department, including approval from the Foreign Investment Promotion Board.

Therefore, HEL may use Essar's licences for long distance services. Essar has close to 33% stake in HEL. On January '06, DoT had reduced the one-time licence fee for offering NLD and ILD services to Rs 2.5 crore each from Rs 100 crore and Rs 25 crore respectively. DoT also cut the annual licence fee for NLD and ILD services to 6% from 15%.