"Subscribers can pay only for local calls and the rest (of the cost) could be adjusted within the existing network," ICO senior vice-president and general manager (India) Bishnu Pradhan said at the signing of an agreement with Videsh Sanchar Nigam Ltd (VSNL) here on Monday for setting up of a joint venture company for exclusive rights for distribution of ICO services in the country.

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.

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.

VSNLacting chairman and managing director Amitabh Kumar said DoT could buy talk-time minutes in bulk for the whole country from ICO and thereby reduce the cost substantially.

Compared to setting up and maintenance of physical phone lines in rural areas, setting up an ICO system would cost much less, Kumar said.

"We should be able to work out a package for India," the VSNL chief said, adding VSNL is looking for one or two partners to set up a joint venture to distribute ICO services in India.

VSNL has invested $150 million (Rs 600 crore) in ICO and would be maintaining and operating ICO's system to be set up at a cost of $60 million near New Delhi.

ICO call charges are estimated to be $3 per minute and the price of hand-held satellite mobile phone would range from $700 to $1,000, Pradhan said.

Kumar said talks would be held with cellular operators for a distribution chain in India.

Pradhan said satellite mobile phone instrument could be used as a terrestrial mobile phone in areas being catered to bycellular services and as a satellite mobile phone in areas not covered by cellular services.

Kumar said a revenue of the order of Rs 300 crore to Rs 400 crore is expected over one to two years from 2001 from ICO services.

He said VSNL's association with competing Iridium global mobile satellite services would not result in conflict of interests as in the case of Iridium, VSNL would be operating only as the gateway in India. "Even if we do enter into agreements with others (competing satellite mobile services), it will be through the joint venture route. Hence, there will be no conflict of interest," the VSNL chairman said.