Two Block Deals Crank Up Vsnl

Videsh Sanchar Nigam (VSNL) stock was in the limelight in an otherwise dull market. As per market sources, there were two block deals of 44,000 and 31,000 shares at Rs 196.25 per share in VSNL early in the day on the Bombay Stock Exchange (BSE). However, the two sides involved in the block deal were not known.

The stock came off from its intra-day high of Rs 196.25 to settle at Rs 182.25, up 2.13 per cent over Friday's close. More than 9.8 lakh shares changed hands on the BSE. While on the National Stock Exchange more than 12.4 lakh shares changed hands.

 

The scrip has been moving up over the last two months. In 39 sessions, VSNL rose 31.5 per cent to Rs 178.45 on March 22 from Rs 135.75 on January 28. Dealers said, renewed buying interest on the counter is on rumours that the initial public offer of Intelsat, in which the company owns 5.4 per cent stake, is likely to unlock value of around Rs 2,400-2,500 crore for the company. Meanwhile, analysts point out that VSNL could now sell its stake in the open market that was blocked for some time.

Last week, VSNL had slashed bandwidth rates by up to 40 per cent. The reduction in bandwidth rates is applicable to the entire spectrum of VSNL bandwidth services, that is right from 64 kbps to 155 mbps, and is expected to benefit all companies alike. Overseas telecommunications provider VSNL's monopoly in international telephony will come to an end with effect from April 1, 2002. Currently, it derives a majority of its revenues from international telephony. As a compensation for advancing the date of ending its monopoly by two years, VSNL has been granted free licence for offering Internet services throughout the country and a national long distance communications (NLD or STD) licence.

Only recently, VSNL signed the licence agreement with the department of telecommunications for commencing national long distance services in the country. As part of the compensation package for early withdrawal of VSNL's monopoly in international long distance telephony, the government will pay back to VSNL a sum equivalent to entry fee (Rs 100 crore) and its annual revenue share as licence fee, net of taxes, for five years.