February 12, 2002

VSNL to be key component of Tata Groups holistic telecom strategy

The Tata Group's acquisition of a 25 per cent stake in VSNL represents a significant milestone in the group's overall strategy of becoming a truly world-class, end-to-end telecom services company. The acquisition provides an ideal opportunity for the Tata Group to samlessly integrate its basic and cellular services business with VSNL's presence in the international long distance (ILD) and ISP businesses, and its imminent foray into the national long distance (NLD) space.

With the Tata Group's dominant presence in both infrastructure and access services, it would have a unique business advantage in terms of its ability to provide a full range of services to its customers and speedily respond to a very dynamic market, which is witnessing changes in customer behaviour, competition, M&A opportunities, and technology.

With the IT and telecom sector in India poised for exponential growth, subscribers to such services are expected to increase from 35 million in March 2001 to about 85 million in 2006. In terms of revenues, by 2006 telecom services are expected to be a Rs 66,000-crore market. With a robust, flexible and holistic business strategy in place, the Tata Group is confident of emerging as a dominant player in the telecom services space by capturing a sizeable portion of this market.

The group believes that, in the not-so-distant future, the contribution by the infocom sector to its turnover and profits will be significant, thus ensuring a high return on investment for all its stakeholders.