Tatas, Reliance Submit Vsnl Bids, Sterling Pulls Out

The Tatas and the Reliance group on Friday submitted financial bids for the government's 25 per cent stake in Videsh Sanchar Nigam (VSNL). The Chennai-based Sterling group, which was in the final race in a consortium with Tycom of the US and CenturyTel, has, however, opted out of the race.

Executives with the Tatas and Reliance confirmed putting in the financial bids, but declined to comment further citing confidentiality issues.

During the initial period, apart from the Reliance group, Sterling and the Tatas, companies such as Bharti-SingTel combine, the AV Birla group and Videocon were in the race to pick up a strategic stake in the over Rs 8,000 crore international long distance (ILD) telephony player in India.

 

Following the divestment of 25 per cent stake in VSNL, the Centre's holding will come down to 27.93 per cent. However, the strategic investor will have to make an open offer for another 20 per cent equity stake after finalising the deal.

The VSNL stock, which opened at Rs 160.40, closed lower at Rs 156.55, after touching an intra-day high and low of Rs 166.40 and Rs 155.50, respectively, on the Bombay Stock Exchange today.

The strategic investor will have the first-mover advantage in the Rs 8,000 crore market as the government will open up the ILD segment for multiple players from April 1, 2002. New players will have to set up their own ILD infrastructure and tap the market, whereas VSNL already has one.

The department of disinvestment is likely to take the bids to the core group of secretaries on February 4 after completing evaluation and the cabinet committee on disinvestment would decide on the strategic buyer on February 5, sources said.

Apart from ILD business, VSNL is a key player in the internet access market. As part of its diversification, VSNL is entering the NLD telephony market with an investment of Rs 2,000 crore in a phased manner.