2. VSNL

With deregulation round the corner, India’s exclusive international

telephony provider, Videsh Sanchar Telecom Nigam (VSNL), is getting ready to

play to a new tune–that of open market forces. With its monopoly slated to be

terminated by the end of March next year, this government protégé stands to

face a host of private companies storming its bastion to access a market

expected to be in the range of $5-6 billion a year.

But VSNL doesn’t need to lose heart. Rather than merely reacting to change,

it can formulate strategy to anticipate change, prepare for it and take

advantage of the new possibilities that deregulation throws up. And it is

already making its moves.

Though there are plenty of opportunities for VSNL, the acid test lies in its

approach to customer service and marketing. In the international telephony

business, the company has not had a direct interaction with customers with the

exception of Internet services. Analysts are unanimous in their views that VSNL’s

fortunes will be decided by its ability to maneuver the unchartered waters

called customer service and satisfaction.

In the previous fiscal, VSNL’s net profit zoomed to 87 percent by reaching

a figure of Rs 1,577.60 crore as compared to Rs 840.30 for the same period last

year. But it may be recalled that VSNL’s bottomline for the fiscal 1999-00

took a beating after the ICO fiasco, where it lost investments worth Rs 513

crore. Total revenue for 2000-01 grew to Rs 7,327.2 crore (provisional) from Rs

6,967.6, exhibiting a growth of 5 percent over the previous year.

The volume of international telephone traffic handled rose by 20 percent to

2,694 million paid minutes. But in revenue terms, this growth has been curtailed

to 3 percent on account of the reduction in Total Accounting Rate.

What has been most impressive about the company’s performance for the last

fiscal was its stupendous growth in the Internet subscriber base. Probably, this

is the first sign that this behemoth can not only survive but also thrive in a

competitive environment as it did in a monopoly. The growth in Internet

subscriber base has been to the tune of 72 percent, which leaped to 6,30,970 on

31 March 2001 from the previous year’s figure of 3,66,432. The number of

leased data circuits (64 Kbps & above) has also increased to 4,916 from

1,634 during the year.

During the previous fiscal, VSNL reduced by 40 percent the cost of its

services at stations serviced terrestrial or satellite leased line links. This

was in line with the 70 percent reduction it offered on leased line tariffs at

Mumbai and Cochin. It also reduced and rationalized tariff for web hosting and

co-location, to customers using VSNL servers.

Today, VSNL has got a total connectivity of 1,000 Mbps.