VSNL, which is the second largest shareholder in ICO Global, a consortium of telecom operators, entered into a pre-launch agreement with ICO Global on Monday to pave the way for the setting up of a joint venture company. This will, in turn, take care of its distribution services in India.

VSNL will have a 50 per cent stake in the joint venture with the rest being picked up by two cellular operators. ICO Global will have a board representative in the joint venture.

The joint venture will have exclusive rights for India and non-exclusive rights for neighbouring countries and regions. Needless to say, the Indian market would represent the largest in the region.

The price of the handsets is expected to be pegged at $700 while the service is expected to cost a consumer about $3 per minute as per current estimates.

It is expected to be launched in India by the third quarter of 2000. In the meantime, the Indian joint venture would prepare itself for enrolling prospective consumers and undertaking marketing initiatives.

ICO is also in talks with the Indian government to work out a package for providing telecom facility in rural areas through the semi-fixed satellite phones of the company.

Talks are on to work out a cost package whereby the consumer continues to pay what he does currently, while the balance of the cost is, through some kind of a formula, shared between the government and service provider.

VSNL has received six bids so far for the joint venture partner and two of these may be shortlisted. The process is expected to be completed in the next couple of months.