Videsh Sanchar Nigam Limited

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In May 1994, the government of India partially divested Videsh Sanchar Nigam Limited (VSNL) and sold 18 percent stake through an initial public offering for US$ 93.4 million. Incorporated in 1986, VSNL was a state-owned operator of international telephone services and internet service provider in India. . In 1997, the government further sold 17% stake through a Global Depositary Receipt (GDR) issue and raised US$526 million. In February 1999, the government sold another 10.5% of its equity through a second GDR issue and raised US$185. The company raised US$17 million through a secondary public offering in September 1999. In February 2002, Government of India further reduced its stake when it sold an additional 25 percent to Tate Group for $530 million. Consequently, VSNL was taken over under the administrative control of the Tata Group. As of December 2002, VSNL had the following ownership structure - Tata Group had 45 percent equity, Government of India owned approximately 26% equity, the overseas holding (inclusive of FIIs, ADRs, Foreign Banks) was approximately 13% and the balance was owned by Indian institutions and the public. VSNL's main gateway centres were located at Mumbai, Delhi, Calcutta and Chennai. VSNL provided International Telephony Services to 236 countries worldwide from over 5,000 towns and cities of India. In March 2004, VSNL took over the narrow band and broadband business of Dishnet’s ISP division for a consideration of Rs2.7 billion, adding momentum to VSNL’s broadband plans. In 2000, the Indian government announced that the company would lose its international voice and data monopoly two years later on that date. In compensation for this change, VSNL received a reported US$153 million, which was a sum equal to the entry fee and license fee for a period of five years starting from April 1, 2001. A performance bank guarantee of about US$85.6 million required for rolling out the national long distance telecommunications service was also to be waived and the company was to be granted a Class A ISP license, which would enable it to expand its internet services service area from six cities to nationwide. In 2004, VSNL invested US$100 million on a 3,175 km submarine cable link between Chennai and Singapore. The company had exclusive rights to provide international telephone services until April 1, 2004. In January 2008 VSNL was re-christened as Tata Communications Limited. The company operates in three segments viz Wholesale Voice, Enterprise and Carrier Data and Other Services. Originally the company only catered to the national Long-distance Telephony business segment. The Government recently made amendments to telecom licences, under which IP VPN services are to be provided under the ILD and NLD licences. The wireless as well as fibre last-mile network can now be used to provide services under the NLD licence. NLD service providers are also now allowed to make their own arrangements for laying the last mile for providing leased circuits and for connecting Closed User Groups.