Vsnl Hit By Belied First Quarter Show
Videsh Sanchar Nigam Ltd (VSNL) today witnessed a dip in its share price following the company's disappointing first quarter results.
Shares of the telecommunications service provider came off from an intra-day high of Rs 123.40 to close at Rs 114.15, down by 5.72 per cent from its previous close.
Around 3.29 lakh shares changed hands on the Bombay Stock Exchange (BSE) and around 8.23 lakh shares on the National Stock Exchange.
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For the first quarter ended June 30, 2002, VSNL posted a 28.5 per cent fall in net profit to Rs 261.20 crore compared with Rs 365.50 crore in the corresponding quarter last year.
Net sales decreased by 10 per cent to Rs 1,373.1 crore (Rs 1,528.3 crore). The company said that traffic volume during the quarter increased by approximately 24 per cent over the corresponding period of the previous year.
Both net profit and sales fell below market expectations. The fall in net profit was purely due to the decline in call tariffs and international settlement rates.
VSNL, which used to get 90 per cent of its revenue from overseas calls, has been badly affected by the loss of monopoly in international telephony, which was open for private players from April 1, 2002, dealers said.
Analysts said the decline in tariff rates could not even match the increase in tariff volumes, which rose by 24 per cent in the last quarter.
Analysts expect VSNL could lose over half of its market share in three-four years as competitors enter the field.
Bharti Telesonic, a unit of the New Delhi-based Bharti Tele-Ventures, this month became the first rival of VSNL to enter the market, resulting in a slip overseas phone rates.
Last week, the company slashed international long distance (ILD) telephony rates by 40 per cent. The drop in rates follows the entry of Bharti Telesonic into ILD services.
VSNL is now bidding to bring rates down to the levels offered by Bharti Telesonic.
VSNL's new service rates are effective from July 19 in Mumbai and Delhi. Following this, peak time calls (6.00 am-11.00 am and 6:00 pm to midnight) for the US will cost Rs 24 a minute and off-peak will be Rs 21.18.
Peak time for Europe will be from 11.00 am to 10.00 pm. For Africa, Asia, Gulf and Oceania also the rates will be same, but peak rates will be applicable from 8.00 am to 7.00 pm.
For the SAARC region, the peak rate will be Rs 21.18 and off-peak at Rs 18. Analysts said increasing competition and decline in rates will have a major impact on VSNL's revenues that could witness sustained decline in the next three to four quarters.
In February 2002, the Centre sold its 25 per cent stake in VSNL to the Tata group for Rs 1,439.2 crore. Along with the 25 per cent stake, the government had also relinquished management control in the erstwhile public sector undertaking. The government still owns around 28 per cent in VSNL.
The Tata group had purchased the stake in VSNL at Rs 202 per share. The Tatas, subsequently, made an open offer for another 20 per cent stake in VSNL and took their total stake to 45 per cent. The total outgo for the Tatas including the open offer was Rs 2,500 crore. The VSNL shares were picked up for Rs 202 per share.