Top 10: 6 - VSNL: A Growing Multinational

VoicenData Bureau
New Update

Videsh Sanchar Nigam's (VSNL) erstwhile monopoly had been

brought down to its knees when its revenue took a hit soon after Tata's

takeover. The illegal ILD traffic coupled with a drop in Internet numbers put

the company on the backfoot and analysts were even betting on its survival.


But VSNL regained its position as a premier telecom company

with a couple of big acquisitions last year. Having acquired Teleglobe and TGN,

it forayed into the international market with a big bang. It grew by 41% to

generate a revenue of Rs 4,799 crore in FY 2005-06.


Area of operation: mso-fareast-font-family:"Times New Roman";mso-bidi-font-family:"Times New Roman";


AR-SA">ILD, NLD, ISP, Data Services

Address: Videsh Sanchar Nigam Ltd, Lokmanya Videsh Sanchar Bhavan,
Kashinath Dhuru Marg, Opp. Kirti College, Prabhadevi, Mumbai-400028

Phone: +91-22-56661837

Fax: +91-22-56669029


This year, despite falling prices of NLD, ILD and

broadband, most businesses VSNL is into, have grown. The company's wholesale

business that comprises of ILD and NLD generated revenue to the tune of Rs 2,162

crore while its enterprise business contributed Rs 1,261 crore. The dial-up

business saw a dip in numbers but broadband users increased from 30,000 in FY

2004-05 to one lakh this year. VSNL provides broadband services through TTSL's

and TTML's wireline services and through cable operators.  


VSNL made global acquisitions-TGN and Teleglobe, which

were part of its long-term strategy to diversify the company's business model

and create global capabilities. VSNL made these acquisitions at very attractive

valuations with the sole objective of making them profitable. The company

acquired TGN and Teleglobe at $130 mn and $239 mn respectively. The acquisition

would give VSNL access to around 250 countries. The company is expecting huge

international revenues from these acquisitions.

To fulfill its global ambitions, VSNL Singapore, the

company's international arm, has launched a dedicated global Ethernet service

that will connect major cities throughout North America, Europe, Asia, and

around 120 cities across India.


  • Acquired TGN and Teleglobe
  • Broadband subscriber base reached one

  • NLD capacity increased to 34,670 km
  • Overall capex of Rs 1,000 crore in FY



The company already has three NOCs-New Jersey, Montreal

and Mumbai. One NOC acts as backup for other NOC. The New Jersey NOC manages TGN

assests while Montreal handles global voice business. Mumbai NOC is for

enterprise business.

On the domestic front, VSNL has deployed the packetwave

multi-service broadband wireless systems in 65 cities of India. This is the

initial deployment phase of the bigger goal of growing the network to cover over

200 cities in 12 months.

The company increased its NLD reach from 137 cities in FY

2004-05 to 197 cities in 2005-06. Till March, its NLD capacity was 34,670 km.

Last year, it also added five IPVPN PoPs to take the tally to 15. This has

further enhanced its VAS offerings, especially in the enterprise segment.


In addition to the acquisitions, VSNL had a capex of around

Rs 500 crore last year. The incremental investments in both the acquisitions

were roughly $34 mn. The company also acquired 100% stake in Tata Power

Broadband from Tata Power for a consideration of Rs 239 crore.

'We have now

become a truly Indian multinational'

What has VSNL done

till now to regain its lost foothold in the market?

Our revenue took a hit a couple of years ago but we bounced back and

are on the path to becoming a truly Indian multinational. Last year was

eventful and we made a few strategic acquisitions that will make us

visible on the global telecom landscape. Next year onward, most of our

revenue would come from international operations. It is quite an

achievement for us as we are now a fully professionally-run company.



N Srinath

With TGN and

Teleglobe acquisitions, you have shifted your focus from domestic to

international. Don't you find the domestic market lucrative anymore?

Our focus hasn't been diverted due to these acquisitions which were

part of our global expansion strategy. We are still quite focused on the

domestic market. All our three domestic businesses-wholesale, enterprise

and retail-saw a major growth last year, despite a price fall in all the

three segments. We deployed packetwave multi-service broadband wireless

systems in 65 cities. Eventually, it will cover more than 120 cities in


How will the TGN and

Teleglobe acquistions help you  gain

space in the global market?

The TGN acquisition has given us an undersea cable network that spans

60,000 km in North America, Europe and Asia, making us the world's

largest provider of submarine cable bandwidth. We acquired the network for

$130 mn. We also completed the acquisition of Teleglobe in February at

$239 mn. The new combined company will own and operate international

mobile, data, and voice networks with coverage to more than 240 countries

and territories. With these acquisitions, we have not only expanded our

reach but also acquired a global customer base simultaneously.

On the domestic

side, what have your investments been?

In addition to the acquisitions, we had a capex of Rs 500 crore last

year. Most of it went into laying the fiber, and providing the last-mile

access to the subscribers which is still a major area of concern for

operators. Last  financial

year, we increased our NLD capacity to 34,670 km and the NLD presence from

137 cities to 197. We had 110 PoPs in 68 cities in India that were

increased to 118 in 75 cities last year.

What's the outlook

for this financial year?

Acquisitions will continue to be part of our global strategy. Since we

completed the acquisitions in the latter half of the year, the real

benefits and revenues will reflect next year. On the domestic front, we

have decided to set up cyber cafes at 68 major railway stations across the

country. Apart from this, we will continue to leverage our relationships

with TTSL and TCS for providing value added services and the last-mile

access. We will grow substantially next year.

Another milestone for the company was a tie-up with

Microsoft. It forged a strategic alliance with Microsoft for venturing into the

web-conferencing market. It has launched the Tata Indicom web-conferencing

service based on the Microsoft Office Live Meeting Platform.

The company has also decided to set up cyber cafes at 68

major railway stations across the country. It is also investing around Rs 100

crore in network management system.