The RailTel Corporation of India on Wednesday signed a memorandum of understanding with the Bharat Sanchar Nigam Ltd.

The MoU will allow the two organisations to tap each others areas of expertise - infrastructure in the case of RailTel and technically-trained manpower for BSNL - at concessional rates. The MoU will be valid for 12 months.

RailTel hopes to arrive at a similar arrangement with the Mahanagar Telephone Nigam Ltd.

Speaking on the occasion, Communications Minister Arun Shourie said the leasing of the surplus bandwidth of the Railways would help BSNL keep communication channels alive even in the event of a catastrophe.

RailTel managing director A K Chopra told Business Standard that the corporation had earned Rs 9.5 crore (Rs 95 million) in 2002-03. He said the projected earnings for the current financial year was Rs 50 crore (Rs 500 million).

RailTel recently entered into a tripartite agreement with Bharti and the Canada-based firm Shosha.com to provide Internet access on trains plying on the Delhi-Mathura route. All the parties involved will make an equal contribution, with the foreign firm pitching in with technology and equipment.

The Railways will transfer assets worth Rs 300 crore (Rs 3,000 million) to its telecom undertaking in the next few days.

This will be in addition to the seed capital of Rs 15 crore (Rs 150 million) given earlier.

RailTel was incorporated on September 2000, with an authorised capital of Rs 1000 crore (Rs 10,000 million).