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VSNL to disinvest 50% stake in Internet subsidiary - Views on News from Equitymaster
 
 
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  • May 9, 2000

    VSNL to disinvest 50% stake in Internet subsidiary

    Videsh Sanchar Nigam Ltd (VSNL) is planning to offer up to 50% equity stake in its internet subsidiary –Videsh Seamless Services Ltd. (VSSL) - to strategic investors.

    Videsh Sanchar Nigam Ltd. is a public sector undertaking offering international telephony and Internet services. The company has a monopoly over voice traffic till 2002.

    This is with a view to introducing a host of new technologies, which requires a strategic partner with superior technical and international expertise. VSNL will however not part with a controlling stake to any company.

    The company is also planning to list the recently floated and fully owned VSSL on the NASDAQ shortly in order to raise funds. The only hitch seems to be obtaining permission from the Union Government which holds a 53% stake in VSNL and has been slightly reticent in divesting its stake in major public sector undertakings. The proposed divestment of 50% will raise adequate funds for the company’s expansion projects. Listing on the New York Stock Exchange will also impart additional liquidity to the company.

    VSNL has over 336,000 individual subscribers and this makes it the largest Internet service provider in the country. It also has 622 subscribers for its leased line services. Of late VSNL has added a host of Internet services like Internet to paging with an association with easy call paging, national and global roaming, multilingual services etc.

    During the last year revenue from Internet business went up by 17% and the total user base increased by 72%. With all these innovations, the public sector juggernaut is all set to improve focus specifically on the Internet business, create profit and responsibility centres.

    It has taken the right decision to opt for superior international technology available abroad to improve the quality of its services and upgrading the same.

     

     

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