Cases

Assessing the Impact of Procuring an International Long Distance License

Challenge

As an on-going process of accelerating telecom reforms, international long distance (ILD) licenses were being made available to international telecom players at highly reduced costs. The senior management of the client, a telecom operator, was divided in its opinion on whether to procure an ILD license or to abstain from doing so. Some of their concerns included:

  • Retaliation from competition in terms of suppressed bandwidth availability
  • Build up of capabilities in the area of managed services by competition, which was traditionally the stronghold of international players (like our client)

Procuring a license, however, would open up new revenue streams such as ILD Voice, International Private Leased Circuit (IPLC) and the opportunity to increase managed service revenues. It also presented an opportunity to move away from the revenue sharing mechanism (where it was legally necessary to share revenues with certain licensed operators) and increase retentions. The management thus requested UC to provide an opinion on the procurement of an ILD license.

Our Approach

UC studied the impact of procuring the ILD license, taking the following steps:

  • Understood the significance of the ILD license and its impact on the following revenue streams -
    • International Private Leased Circuits (IPLCs)
    • Managed Services
    • ILD Voice
  • Met and interviewed industry experts, regulatory authorities and competition to understand the industry dynamics
  • Understood competitive dynamics in terms of possible retaliation including suppression of bandwidth availability, artificial hike in bandwidth prices (though within regulation)
  • Understood the status of future reforms like ‘open access’ and its impact on clients' businesess in India.

Impact

Identified incremental opportunities for the company within the ECS space and prepared indicative revenuesfor the client for each short listed opportunity.