Tuesday, July 26, 2005

Another Indian overseas acquisition

This time it is VSNL. VSNL, once used to be known as Videsh Sanchar Nigam Limited and was a sleepy government organisation. ( It was a lot more responsive than other government departments). It was also the place that we went to and stood in line to get our student internet account (a shell account) that showed the internet sans graphics and was sold at a discount sometime in the late 90s. The real internet account (they called it the tcp/ip) was available at a higher price. (More internet nostalgia soon). Then, the TATAs brought it over and the sleepy VSNL is now a marauding telecom company.

VSNL is going to buy Teleglobe for about a 1000 crores. Here are snips from the piece on Businessline.

...Barely a month after it announced the closure of its acquisition of Tyco Global Network for $130 million (over Rs 550 crore), Videsh Sanchar Nigam has entered into an agreement to acquire Teleglobe International Holdings Ltd for $239 million (over Rs 1,000 crore)...

...The Tyco Global Networks (TGN) buy made VSNL the biggest supplier of submarine cable connectivity in the world. Teleglobe's wholesale voice/voice-over-Internet-protocol, and Global Tier-1 IP network can be overlaid on the TGN network to provide value-added services to enterprise customers across the globe, he said.

(Teleglobe made an important acquisition in VoIP-leader ITXC Corp in May last year.)

Teleglobe has an extensive global network that reaches more than 240 countries and territories with advanced voice, data and signalling capabilities and ownership interests or capacity in more than 80 sub-sea and terrestrial cables, said a statement from VSNL.

Through Teleglobe, VSNL will be able to access more than 200 direct and bilateral agreements with leading voice carriers, many of them incumbent carriers within their countries or large international wireless service providers. In addition, VSNL also gains an international workforce...

Reliance Infocomm is another of the telcos with big aspirations . They recently acquired FLAG telecom. With VSNL making its next step, we will see what Reliance comes up with.


Badri said...

Unfortunately, Tatas have still not worked out their telecom goals - it looks like. Acquiring a few bankrupt and restructured assets is okay only upto a point. But Tatas are not clear how to tap into the Indian telecom growth. They are a distant fifth operator in the mobile telephony scene through Tata Indicom CDMA mobiles. (Bharti, Reliance, Hutch, BSNL being the top four).

Like anybody else, they are not too aggressive about landlines, but that will restrict them in the potential broadband foray. They have - through VSNL - acquired Dishnet DSL, but cannot offer DSL services in most markets because they do not have access to telephone lines (except in Andhra Pradesh and Maharashtra).

They have not clearly identified their focus areas in India, which will turn out to be the real cash cow for them to go out and acquire companies elsewhere to become a large global telecom player.

They have not looked at resolving the ownership issues for Idea where they hold one third equity.

Their dial-up ISP is being hammered out of shape by BSNL (simply becaise of monopoly policies, but no one seems to be protesting!). Sify has almost given up on dialup ISP services.

In all, despite the latest acquisitions, I can't understand where VSNL is heading.

Neelakantan said...

What is Tatas long term telecom goals? Well, nobody knows for sure and what you have said looks right at this point in time. They are a distant fifth operator (and as a user, I am not sure this level of service will get them anywhere)in India.

But from the perspective of Indian industry making a mark in industries globally, Tatas are up there.