VSNL: Boy, That’s Downhill!

VSNL	3
MD: SK Gupta Address: Videsh Sanchar Bhavan Mahatma Gandhi Road, Fort Mumbai - 400 001 Maharashtra Tel : 022-22624020, 22624300 Fax:022-22624027, 22667744 Website: www.vsnl.com V&D estimates CyberMedia Research

FY 2002—03 was VSNL’s first full year as a private entity, shorn of its monopolistic status as an ILD player. It reported
around 32 percent decline in revenues and registered total revenues of Rs 4,812.5 crore in FY 2002—03 as against Rs 7,089 crore in FY 2001—02. Even the net profit took a beating and dropped by 44.57 percent.

ILD (voice) revenues, at Rs 3,710 crore remained VSNL’s mainstay, constituting 77 percent of its total pie. In terms of traffic, VSNL handled a total of 3 billion minutes during the year, which was a shade less than previous year"s figures of 3.12 billion minutes. But with the coming of new operators in ILD, VSNL’s market share shrunk by around 16 percent. Not the one to be dethroned so easily, VSNL has now taken some bold initiatives to overcome the problems. It is foraying into new foreign markets and has therefore sought an EGO license for providing international long-distance services in Sri Lanka. It has also opened a subsidiary in the US.

The saving grace for VSNL was non-voice related services, which, at around Rs 853 crore, accounted for 18 percent of its revenues. The company is strongly focussing on other services and has increased its revenues significantly to offset the loss incurred in telephony services. On the ISP front, with 700,000 Internet subscribers, VSNL retained its No. 1 position.

On the NLD front, the company has launched its operations and is presently running traffic in 10 cities. The company has netted a small revenue of Rs 40 crore from its NLD operations.

In terms of investment, the company invested around Rs 350 crore in the wholly owned Tata group-company Tata Teleservices (TTSL) as part of its proposed investment of Rs 835.8 crore over a seven-year period.