VSNL to invest $230 mn over 3 years in S Africa

To operate national long distance and fixed wireless networks.

Videsh Sanchar Nigam Ltd (VSNL) will invest over $230 million over three years in South Africa to develop and operate national long distance (NLD) and fixed wireless networks in the country.

The Tata group company expects its services, which would be operated through South Africa's Second Network Operator (SNO), to go onstream by the first quarter of next year.

"The group will invest over $230 million for South African operations, with the services expected to roll out from Johannesburg and later to other places of the country. The operations in the country would be rolled out through a special purpose vehicle (SPV), Strategic Equity Partner Company (SepCo)," sources close to the development said today.

The amount is an increase of $30 million from the earlier proposed investment of $200 million that was earmarked for Tata group's telephony services in South Africa.

SepCo was rolled out by a consortium that owns SNO, with the Tata group holding an majority stake and South African companies including Eskom Enterprises, Transtel and Nexus Connexion being the other partners in it.

Tata South Africa Holdings SA, the investment arm of Tata group in South Africa, will spearhead the operations, while the foray will provide VSNL an access to country's market that was dominated by a monopoly player, Telekom.

Earlier, VSNL chairman Subodh Bhargava had said the company woulsd roll out its services by the first quarter of next year. The South African government had earlier decided to open its telecom market to foreign players, as it felt that the largest fixedline operator in the country, Telkom, needed competition. This was because prices of telephony services in the country were "high".

The Tata group had also set up a manufacturing base in the country for buses and was also planning an assembling unit for its small cars.