Tariff rebalancing unbalances VSNL - Views on News from Equitymaster

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Tariff rebalancing unbalances VSNL

Oct 31, 2000

With continuing reduction in international telephony rates Videsh Sanchar Nigam Limited's (VSNL) topline growth continues to be under jeopardy.

(Rs m)2QFY00 2QFY01 Change
Sales 16,655 16,710 0.3%
Other Income 1,223 1,539 25.8%
Expenditure 12,243 12,849 4.9%
Operating Profit (EBDIT) 4,412 3,861 -12.5%
Operating Profit Margin (%)26.5%23.1% 
Interest - -  
Depreciation 235 289 23.0%
Profit before Tax5,4005,111-5.4%
Tax 1,934 1,639 -15.3%
Profit after Tax/(Loss) 3,466 3,472 0.2%
Net profit margin (%)20.8%20.8% 
No. of Shares (eoy) 95 95  
Diluted earnings per share* 146 146  
P/E Ratio 4.2 
(*annualised)   

The company has done well to prevent erosion in top and bottomline. The sharp cuts in telecom tariffs have prevented any realisation growth. Performance has been salavaged due to the increase in international telephony traffic, which was up 17.8% for 1HFY01.

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