"Now that limited mobility has been recommended for basic operators, and with MTNL's entry into the Delhi market, the rates too have dropped.

Therefore, there are questions over the financial viability of the fourth cellular operator," said VSNL chairman and managing director Shailendra Kumar Gupta in an exclusive interview with The Financial Express.

One additional concern is that VSNL will have to fulfil its cellular ambitions by bidding for the fourth cellular operator in whichever circle it is interested. "VSNL can only enter as the fourth operator through the normal bidding process, as the third slot in each circle is reserved for the incumbents (MTNL or BSNL)," Mr Gupta added as he explained the rationale behind the rethink.

To resolve the fourth-operator concerns, VSNL now plans to seek the advice of a consultant, who will be finalised over the next two to three days. The bids for consultants had been invited earlier to figure out the modalities of VSNL's foray into cellular services. "We would be satisfying ourselves about these doubts of the financial viability before the bids for the fourth cellular operator are invited in February," added Mr Gupta.

If VSNL is reassured about the financial viability, it is expected to bid for the fourth licence in metros such as Delhi, Mumbai, Kolkata and Chennai.

"If the financial viability is assured then our obvious choices for the bids would be the cities where VSNL already has a presence in terms of infrastructure and a management nucleus," said Mr Gupta.

VSNL earlier had a monopoly license effective till March 2004. This was truncated to March 2002, last year as part of the telecom liberalisation process. Consequently, VSNL has been scouting for additional business opportunities to compete effectively in the post Mrch 2002 scenario.

Cellular operations was one of the options that the organisation had actively been considering.