Reliance and China Telecom in connection deal

Leading Indian cellular operator, Reliance Infocomm, and China Telecom, the country?s main fixed-line carrier, have signed a deal to provide the first direct telecom connection between the two Asian countries.

Telephone calls between China and India, which have been contentious neighbours in the past, are currently routed through the US and Europe.

Reliance Infocomm, by some estimates India?s largest wireless carrier with 15.5m subscribers, will now route calls through the under-sea cable lines operated by Flag Telecom, a UK-based wholly-owned unit it purchased in 2003.

A connection between Flag and China Telecom?s domestic infrastructure has been established in Hong Kong. Direct connectivity will bring down currently high phone tariffs between the two countries, which have seen increased business links in recent years as both economies enjoy growth of 8 to 9 per cent.

A local newspaper said calls from India to China would fall by about 55 per cent to Rs8 ($0.17) per minute.

?India and China are fostering trade in a very big way,? a spokeswoman from Reliance Infocomm said. ?Communications needs have grown over the last few years.?

India?s total trade with China grew by 46 per cent in the 2003-2004 fiscal year and 40 per cent the previous year, according to figures from the India?s Department of Commerce.

At some 67m subscribers, India is home to the world?s fastest-growing mobile phone market. Revenues are growing 35 per cent each year over the next few years, and the number of subscribers is seen growing to 300m by 2009.

Reliance Infocomm is an unlisted company owned by Anil Ambani that operates mostly on the CDMA network. China Telecom is a large state-owned enterprise.