VSNL profile changes with global buys
Deccan Chronicle — February 23, 2006

The business profile of Videsh Sanchar Nigam Ltd has changed with the company completing the $239 million acquisition of Bermuda-based Teleglobe International Holdings last week, analysts said. Revenues of VSNL, which acquired US-based Tyco Global Network, from Tyco International for $130 million, are seen much higher in 2006-07. VSNL, which acquired Tyco Global in November 2004, has presence in national and international long distance services, broadband and Internet services as well as retail and enterprise segments. The replacement cost of Tyco Global's infrastructure for VSNL is estimated to be $2 billion.

According to a report by domestic brokerage IL&FS Investsmart, "The combined revenues of Tyco Global Network and Teleglobe are likely to exceed that of VSNL standalone in 2006-07 est-imates. Hence, VSNL sho-uld be now valued as such." In a release on the website of NYSE, VSNL said, "At Teleglobe's current revenue levels, the acquisition could increase VSNL's annual revenues by up to 200 per cent in 2006-07." VSNL reported a 5.5 per cent rise in net profit to Rs 150 crore during the December quarter. The company's sales rose 16.3 per cent to Rs 977 crore. The company says over half of its consolidated turnover now comes from businesses outside India with a quarter of its employees located overseas. The Teleglobe acquisition will itself add over $1 billion in revenues to VSNL's books.

Teleglobe, for the nine-month period ending Sep. 30, 2005, reported consolidated revenues of approximately $735 million. Figures for Tyco were not available. On the significance of the two acquisitions for the Tata group company, Srinivas Addepalli, head, corporate strategy, VSNL, said, "Tyco gave us the infrastructure i.e. global data capability and a very strong bandwidth ownership, while Teleglobe gave us the volumes and Internet protocol business."