VSNL gets into acquisition mode again

Having made two major overseas acquisitions, the Tata-owned VSNL is looking for further acquisitions to add to its services and customers base.

"We are not looking at network additions that we have done in our last two acquisitions "" Tyco for data and teleglobe for voice. We are looking at acquisitions in India and overseas to add to our services and customers," N Srinath, director (operations), VSNL, said.

He said the recent Teleglobe acquisitions may help it lower the settlement charges paid by it to carry the overseas calls but in terms of providing any benefit to the customers, it depends on the access providers (BSNL) to extend it to the consumers.

In a call to us from India which costs Rs 7.20 a minute, Rs 4.25 goes as access deficit charge, out of the remaining, VSNL gets 1-2 cents as settlement rates and even if it reduces it to 60 paise, the reduction is not much to benefit the customers in a larger way.

The Teleglobe acquisition would offer derisking its international long distance revenues which has been under strain due to competition and under-cutting by other operators and will be under more adverse impact once BSNL sets up its own ILD infrastructure, srinath said.

He reaffirmed that VSNL might have lost a bit of business in ILD segment but it still has edge which is corroborated by the fact that three years ago it was carrying three billion minutes of voice and it is still carrying the same.

Srinath refuted the allegations that VSNL was not giving landing rights to other operators on underseas cables asking them to set up their own stations instead of asking one.

Last month, VSNL completed the acquisition of undersea cable network company Tyco Global Network, a move that would provide VSNL more bandwidth for providing connectivity to carriers and other businesses like it and BPO.

Tyco Global Network, which VSNL acquired for $130 million, has over 60,000 km undersea cable network.

Ongoing management responsibility of Tyco Global Network would be assigned to VSNL international, a division leading VSNL's expansion into e-global market.

The agreement culminates a nearly eight-month process that involved approval from regulatory bodies in us and other countries.

In July also, making its second overseas acquisition in telecom space within a year, VSNL announced its plan to acquire Bermuda-based Teleglobe International Holdings Ltd, a provider of wholesale voice, data, IP and mobile signalling services, for $239 million.

"The acquisition will be carried out through amalgamation of Teleglobe with the VSNL's subsidiary in Bermuda, VSNL Telecommunications (Bermuda) Ltd and expected to be completed in six to eight months," Srinath had said.

The acquisition, which would push the Indian entity into top three slot of global wholesale voice players, is valued at $239 million, comprising of debt and payment of $4.50 per share to teleglobe shareholders, he said.