VSNL

face="Times New Roman" size="2">Year Of Start-up: 1986



CEO: Amitabh Kumar


Turnover: Rs 6,395.90 crore


Growth: 21.01 percent


Area Of Operation: International telecom services, value-added services


Address: Videsh Sanchar Bhavan, MG Road, Fort, Mumbai - 400 001


Tel.: 022-2624020


Fax: 022-2624466


E-mail: helpdesk@giasbm01.vsnl.net.in




Website: www.vsnl.net.in

India’s

only international telecom service provider, navratna Videsh Sanchar Nigam Ltd

(VSNL), came out top once again last year. Both in terms of revenues earned and traffic

volumes generated, VSNL surpassed several forecasts. However, compared to its own

standards, the growth in revenues was not proportionate to the increase in traffic. And

increasing accounting rates brought in some discomfort. Revenues would have been even

lower had not the depreciation of rupee brought in valuable income in the other income

section. The brighter side, undoubtedly, was the good performance of its value-added

services which started to roll out smoothly.

The total revenues increased by

21.01 percent to Rs 6,395.90 crore from the previous year’s Rs 5,285.30 crore. Net

profits grew by 78.03 percent to Rs 898.3 crore. The main factors which have driven the

growth in net profits were volume growth, increasing operational efficiency, efficient

network utilization, and depreciation of the rupee.

The volume of traffic increased

from 1,385 million paid minutes in 1996-97 to 1,679 million minutes by March-end of 1998.

To handle the growing traffic, it increased the number of telephone circuits to 15,431

from 14,184 in 1996-97. While the net revenue per minute was Rs 9.96 in 1996-97, the same

in last fiscal was Rs 10.26. And the incoming and outgoing call figures were at Rs 9.22

and Rs 13.34, respectively. The incoming to outgoing call ratio for the last fiscal stood

at 2.98 against the previous year’s 2.60. This ratio with US alone was 10.86, which

accounted for 37 percent of the total traffic. It was due to the revenue sharing agreement

with DoT, that VSNL’s earnings were not impacted. But this is likely to increase the

FCC pressure on VSNL to reduce the accounting rates.

The growth in revenues was not at

par with the growth in traffic volumes due to the declining accounting rates. Though the

trend is likely to continue, VSNL’s bottomline does not appear to be affected for the

time being because of its fixed revenue sharing arrangement with DoT. The fiscal 1997-98

registered 256.22 percent growth in the other income category. The figure increased from

Rs 74.70 crore in 1996-97 to Rs 266.10 crore last year. About Rs 207 crore of the other

income came through foreign exchange.

The company is gearing up to make

forays into value-added services through some significant investments. Though 95 percent

of the revenues came from international telephony, value-added services started producing

the desired results. Revenues from leased lines, Internet, Inmarsat, and Intelsat service

increased by 64.16 percent to Rs 270 crore.

While Internet services posted a

235 percent growth and contributed Rs 59 crore, the leased lines revenues were Rs 192.5

crore. The slashing of Internet access rates by 33 percent in January is expected to

increase the Internet subscriber base to 1.8 lakh by March 1999. One of the most important

initiatives that VSNL took last fiscal was setting up of a wholly-owned subsidiary, VSNL

Seamless Services Ltd (VSSL), to concentrate on value-added services—Internet,

E-mail, EDI, and videoconferencing. VSSL is likely to become operational by the year end.

About Rs 1,200 crore was

earmarked for capital investments during 1998-2002. It includes Rs 400 crore for the

regional hub, Rs 240 crore for SEE-ME-WE3 cable, Rs 200 crore for earth stations, Rs 80

crore for new gateways, Rs 220 crore for the ICO Globalstar project, and Rs 80 crore for a

network management centre. It even has plans to further divest and repeat its success of

GDR issue. But it has refrained, looking at the South-East Asian currency crisis and

turmoil in the stock markets across the world. Despite many an adversity, the company

managed a strong balance sheet.