VSNL eyes $1 bn revenue from S Africa
Business Standard — April 21, 2006

VSNL's South African telecom venture, Second Network Operator Telecommunications (Pty) Ltd (SNO), is eyeing a billion dollar revenue in its initial five years of operations. The total investment for SNO project is about $1.2 billion. VSNL along with the Tata group's African holding company Tata Africa will invest over $200 million in the venture. VSNL is part of the group of entities forming the Strategic Equity Partner Company (SEPCO) which has a controlling stake of 51 per cent in SNO.

VSNL-Tata Africa is the dominant player with 51 per cent in the SEPCO, thereby resulting in a 26 per cent equity stake in SNO. VSNL will operate and manage the business of SNO. As a principal shareholder of the SNO, VSNL will leverage its global infrastructure strength to fuel ITeS and other services sector growth in the South African market, said Ajay Pandey, Managing Director, SNO. "The idea is not to create an Indian company in South Africa but all attempts is towards creating a South African company in South Africa," Pandey said.

He pointed out that within few weeks the name of the company will be changed so as to reflect the integrated operations of the company. Meanwhile, SNO is all set to roll out its wholesale products such as international voice transit, national leased lines, international leased lines and internet bandwidth by July. SNO is also planning to roll out its retail offerings such as national private leased circuits, international private leased circuit, IP virtual private networks, internet connectivity and voice (fixed telephony & wireless mobility).

South Africa has got over 30 million mobile subscribers out of 45 million population. Over 52 per cent market share is with global telecom major Vodacom while MTN holds 36 per cent. Local company Cell C has 12 per cent market share in the country's mobile phone market. Interestingly, cost for having mobile phone in the county remain high and bandwidth consumption is low. "VSNL will offer direct connectivity to major carriers and a choice which is absent today. The VSNL companies such as Tyco, Teleglobe, and Tata Indicom cable ventures will also supplement the SNO roll out," Pandey said.