VSNL likely to sell Intelsat pie to ally

The Tata-owned Videsh Sanchar Nigam Ltd is looking at offloading its 5.42 per cent stake in Intelsat to strategic investors following a delay in the initial public offer of the Washington-based global satellite communications company. VSNL is the third-largest investor in the company.

Intelsat had proposed to offload its 20 per cent equity and get listed on the New York and London exchanges.

But the IPO was shelved following scandals in the US, involving companies such as WorldCom, and a downside in the telecom industry globally.

A senior VSNL executive said, "We are talking to strategic investors to sell our stake. This is one of the options being considered following the delay in Intelsat's IPO." He added, "The company will sell its holdings only if it gets a good price."

Refusing to divulge what the 'good price' is, the executive said, "The equity was earlier valued at Rs 1,000 crore (Rs 10 billion)." In fact, VSNL had chalked out its fund raising plan to time it with Intelsat's IPO.

According to Tata executives, the delay has eroded the valuation of Intelsat's holding. "The global telecom sector is still down. Sentiments are still weak which has resulted in the earlier valuation of approximately $19 a share going down to as low as anywhere between $10 and $15 a share," the executive said.

Intelsat is the largest communications network across the globe serving over 400 customers in approximately 200 countries and territories through its more than 20 geosynchronous satellites.

The company's services are mainly used in for voice & data for telecommunications carriers, corporate networks, video and internet backbone connectivity.

Intelsat is owned by international firms with major stake holders such as Lockheed Martin Corporation, France Telecom, Telenor Broadband Services, British Telecommunication and VSNL.