Revenues from NLD voice services to plummet, says Merrill Lynch

Indranil Chakraborty and Krishna Gopalan in Mumbai

The total revenues from National Long Distance (NLD) voice services from inter-circle and intra-circle segments is expected to touch Rs 9,700 crore by the year 2004. This is against Rs 12,000 crore for the financial year ended 2001.

Merrill Lynch has come out with this estimate on the eve of Bharti Televentures’ (BTVL) IPO. The study points out that there will be a decrease in revenues from voice services accompanied by an increase in data service revenues.

“We expect that India’s nascent data demand will grow to realise true potential over the next few years,” says the study. It adds that the main determinants of data traffic will be investment in and development of ISPs (internet service providers), VPNs (virtual private networks), call centres and IDCs (internet data centres).

Merrill Lynch expects at least two NLD operators to start services in addition to monopoly incumbent BSNL. “While BTVL’s strategy is to launch NLD operations from scratch, both Reliance and Tata group are likely to decide their strategy depending on the success in their bid for VSNL under the government privatisation programme,” says the study.

Merrill Lynch believes that despite two rounds of tariff rebalancing, the NLD rates are still high. It predicts 2-3 competitors to start services with initial focus on high traffic metro routes. “Going forward, competition will induce tariff reduction and low price-volume elasticity are likely to drive a shrinkage of this segment in the near term,” says the study.