GAIL, Power Grid And RailTel Sign MoU
29 October 2005, EFY News Network

GAIL, Power Grid And RailTel have signed a MoU to enhance their telecom operations.

Friday, October 28, 2005:
GAIL (India) Ltd, Power Grid Corporation of India Ltd and RailTel have pooled in their telecom infrastructure to synergise their telecom operations. The three will combine together to become the country's second largest broadband service provider. The resulting consortium also has plans to venture into STD and ISD services.  

The three companies have signed a memorandum of understanding to form a consortium to jointly offer bandwidth for e-entertainment, e-education and e-medicine.The consortium will provide viable alternative to the government for its e-learning and e-governance programmes. In future, the consortium may also enter national and international long-distance.

The gas major GAIL owns around 13,000 km of optic fibre cable network, Power Grid Corp has laid around 19,000 km of cables linking 60 major cities. RailTel has networked 2,200 towns with a 27,500-km cable network. The consortium will also provide connectivity to Jammu and Kashmir and the north-eastern States.

The consortium expects an eight-fold increase in its revenue from the telecom segment. R.P. Singh, chairman and managing director, Power Grid said, "We are coming together to offer reliable, quality and affordable services. The consortium, which will co-ordinate marketing and future OFC development plans to get a pan-India footprint, will primarily focus on the entertainment sector and is targeting Rs 1,000 crore revenue from the business by 2008.”

At present, the three public sector undertakings put together earn about Rs 100 crore from this segment. A joint working group will be set up to suggest the mechanism for infrastructure utilisation and business models for division of revenue, and the cost incurred.

The GAIL chairman and managing director, Proshanto Banerjee, said, “The consortium would take shape over the next three months and a viable business model will be worked out on the basis of revenue sharing. The consortium aims to target the enterprise segment by providing a virtual private network, broadband and managed services. The integrated network of the three companies will be ramped up to a 75,000-route km in two to three years.”

The consortium has also projected its total broadband business in the country to be about Rs 9,000 crore. They are looking to get at least 10 per cent or about Rs 1,000 crore in three to four years. At present, RailTel earns revenues of about Rs 65 crore from its telecom venture, while Power Grid and GAILTEL — the telecom arm of GAIL (India) — earn about Rs 25 crore each.

The combined network which is more than 60,000 kilometre of optical fibre cable of the three public sector undertakings is expected to grow to 75,000 route kilometres in next 2-3 years.

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