Reliance Communications announces updates on Flag Telecom and VSNL arbitration

With reference to the earlier announcement dated May 26, 2006 regarding an Arbitral Award given by the International Court of Arbitration of International Chamber of Commerce (ICC) in the matter of Flag Telecom Group Ltd v/s Videsh Sanchar Nigam Ltd (VSNL), Reliance Communications Ltd has announced that the Company have been informed by FLAG Telecom Group Ltd (FLAG), an associate of the Company that:

1. The negotiations, under an award of the international tribunal, between FLAG and VSNL for determination of reasonable and cost-based access charges at VSNL´s Mumbai landing station have failed due to monopolistic and anti competitive attitude of VSNL.

2. VSNL´s refusal to negotiate landing station access charges in good faith, and on basis of costs incurred, has resulted in failure of negotiations.

3. The failure of negotiations would harm the ITES/BPO and other user industries in India due to the exorbitantly high bandwidth prices and landing station access charges maintained by VSNL, which lead to unrealistically high costs of international connectivity for Indian Enterprises, thus resulting in higher costs for the end consumers in India.

4. Since the 90 days period permitted by Arbitration Award for negotiations, in good faith, for reasonable access charges at VSNL´s Mumbai landing station is over, FLAG has approached the Tribunal for its determination of the reasonable and cost-based access charges.

5. FLAG has also approached the Tribunal for setting a time table for determination of damages due to the unlawful refusal of VSNL to grant access to FLAG from 1998 onwards.

Source : Equity Bulls

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