The Tatas are weighing the possibility of joining the race for picking up 25 per cent stake in Videsh Sanchar Nigam Ltd (VSNL).

Tata Industries is understood to have held informal discussions on the issue with a couple of merchant bankers.

The Tatas, who are expanding their mobile telephony business in a big way in association with strategic partners, are in the process of framing their investment strategies.

"We are exploring possibilities for bidding for VSNL. This an opportunity for us to grow in the telecom market," said Kishore Chaukar, managing director of Tata Industries.

"However, the board of Tata Industries is yet to approve any such proposal," Chaukar told Business Standard. Tata Industries is the holding arm for the group’s technology companies.

Tata Industries has not decided whether to partner the Birla-Tata-AT&T combine in the bidding. "We cannot say which group company would bid for VSNL. We are also yet to take any decision on whether the group should go for alliances or whether to go it alone," Chaukar said.

If the Tatas bid for VSNL, it would signal the group’s possible entry into the international long-distance telephony segment. The company has already entered the Internet business, in addition to cellular and basic telephony.

It is not known if the Tatas will venture into the domestic long-distance telephony sector. If the group decides to join the race, the Tatas will pose a major threat to other possible domestic bidders such as Reliance, Bharti group and the BPL group, among others.

Though domestic conglomerates like the Tatas and Reliance have evinced interest in taking a stake in VSNL, indications are that most of the global players may keep way from the disinvestment process due to dismal market conditions in the US and Europe.

Analysts say the Birla-Tata-AT&T combine may not partner the Tatas for the VSNL bid. However, the group is open to forging alliances with telecom firms for the purpose.

The Birla-Tata-AT&T combine is planning to become a pure mobile company and may not want to diversify into other areas like international long-distance telephony.

The biggest advantage a domestic company like Tata Industries has in bidding for the VSNL stake is that it can acquire the entire 25 per cent stake.

Overseas firms are required to rope in a domestic company to pick up the government stake.

"This is mainly because the government does not allow more than 49 per cent foreign holding in VSNL. As GDR/ADR holders have over 30 per cent stake in VSNL, the foreign bidders will be forced to partner a local company," an analyst said.