VSNL plans Hong Kong operations

Gets green signal to enter UK market.

Videsh Sanchar Nigam Ltd, the Tata group-run international long distance services company, is spreading its wings abroad.

After starting operations in Sri Lanka and Singapore, it is now planning to set up operations in Hong Kong, where it has applied for a telecom service licence, though it will have to tie up with a local company for last-mile access. Furthermore, it has also obtained all the legal permissions to enter the UK market.

VSNL has also set up an international business group to handle its international sales operations and has roped in Vinod Kumar from WorldCom to head this group.

The company is also augmenting its international connectivity by setting up a sub-sea cable between Chennai and Singapore as well as a Japan -US cable.

VSNL's Director, Operations, N Srinath Srinath, pointed out that "we have made provisions to branch out the cables at various places to link them with other geographical locations."

VSNL has chalked out a Rs 2,000 crore capital expenditure plan for 2004-2005.

The money will be spent on adding various services, including an aggressive thrust on broadband.

At an analysts meeting here on Tuesday, VSNL Managing Director SK Gupta said, "The company is diversifying its business."

Explaining the new business model, Gupta said revenues from the international long-distance business had dropped on account of the sharp decline in international settlement rates.

"The international settlement rate was in the range of Rs 10 per minute in the monopoly regime. This has come down to as low as around 50 paise now," he pointed out.

Srinath said the company has "changed its revenue mix." The ILD business which earlier accounted for 85 per cent of VSNL's revenues now contributes less than 70 per cent. VSNL is now focusing on net telephony, broadband, frame relay and IP-VPN.

The company is also working on a three-pronged approach to tapping the market, drawing on the domain expertise within the Tata group. Drawing on the synergy with Tata Consultancy Services, CMC, Tata Infotech and the group's BPO operations, Srinath said, "We can offer customised solution to our customers."

VSLN has also given a VRS to over 1,000 staffers, inducted 500 younger, more skilled staffers and outsourced several operations, Srinath said, in an effort to cut costs.

Explaining the acquisition of Dishnet's ISP division, Srinath said that it had given the Tata group a headstart in the retail broadband business.