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VSNL gears up to take on competition - Views on News from Equitymaster
 
 
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  • Dec 24, 1999

    VSNL gears up to take on competition

    The public sector international telephony services provider, Videsh Sanchar Nigam Limited (VSNL) is reported to be planing on acquiring stakes in international telecom companies. It is also reported to be in the process of launching its broad band service in alliance with the cable service providers.

    VSNL (FY99 Income Rs 71.76 bn) is India's monopoly provider of international telephony services. It also provides telex and telegraph services as well as value-added services such as leased lines, e-mail, Internet and video conferencing.

    VSNL's monopoly over international telephony is to be diluted by the middle of the next decade. Infact, the government, by allowing Internet services providers to set up their independent international gateways for data traffic, has already diluted the carrier's monopoly. In light of such a scenario it was only logical that the company expand its telephony business and give a boost to its Internet division. These two initiatives will probably enable the company to achieve considerable success in its objectives.

    While acquiring stakes in international telephony companies, which includes Tanzania Telecom, the company is hedging its main line of business. VSNL seems to be looking at countries like Nepal that offer large scope for growth. Thus the companies main line of business could continue to grow significantly in the future.

    VSNL is India's largest Internet service provider (ISP). However, with an increasing number of players entering this sector, the company's dominant position has been threatened over the last one year. The decision to launch broad band services will give VSNL a technological edge over most of its competitors. With broad band being increasingly being touted as the way ISP services should be provided, VSNL definitely stands to gain a lead over its other competitors. The success of the service will however depend on the pricing and other such issues.

    VSNL seems to be preparing itself for a more competitive scenario, in both telephony and Internet services. Nonetheless, the dilution of its telephony services monopoly is likely to adversely affect the company. These proactive measures will however go a long way in ensuring that the damage is minimised.

     

     

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