Search the Internet          Tips  Sites: Finance, Investment

Tatas to review VSNL bid

Baburajan K

The Tata group will review its bid for Videsh Sanchar Nigam Ltd after the government spells out its policy on the opening up of the international long distance telephony sector.

"Our final decision on investing in VSNL will depend on the proposed ILD guidelines on the licence fee and other parameters. The ILD policy will have a direct impact on the valuation of VSNL and our plans to enter the sector through VSNL," a top Tata executive said.

However, the Tata official maintained that the group does not propose to pull out of the race at this stage. "We are completing the due diligence process and our intention of entering the sector has been clear from the beginning. However, the pros and cons will have to be weighed before we submit the final bid," he said.

The Tatas will not set any formal condition when the government puts up its white paper on ILD for discussions. The Centre is expected to come out with a white paper on the opening up of the ILD sector within a couple of weeks.

Earlier, the government was planning to release the discussion paper in the fourth quarter of the current financial year. It is learnt that the VSNL bidders are pressurising the Centre to hasten the policy decision, according to a senior VSNL official.

Though the Centre decided to end VSNL's monopoly in the international long distance telephony business during the last fiscal, it never announced a clear policy on inviting more firms.

Although the VSNL divestment attracted many domestic players initially, a number of them have since pulled out. The contenders finally left in the race are the Reliance group, the Tatas and the BPL-Sterling consortium. The delay in announcing the ILD policy and other matters have already prompted the AV Birla group, the Bharti-SingTel consortium and Videocon to exit from the race. Recently, BPL Communications has said that its bid is also under review.

The expert committee on Internet telephony set up by the government has already given its green signal for allowing the service from April next once VSNL loses its monopoly in international voice traffic.

The committee has recommended that any licensed ILD/NLD/ISP operator may be permitted to offer net telephony service as per licence conditions of the respective services. This means that the revenue of VSNL will be shared by all telecom operators.

Powered by

YOU MAY ALSO WANT TO READ:
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report