India's MTNL, Satyam Plan Direct Global Internet Access (Update3)
Satyam: satyam.com
MTNL: nic.in
Bloomberg News
July 21, 1999, 6:10 a.m. PT
(Adds more details and closing stock prices.)
New Delhi, July 21 (Bloomberg) -- Mahanagar Telephone Nigam Ltd., India's biggest phone service provider, and Satyam Infoway Ltd., the second-largest Internet service company, plan to get their global gateways for Internet services, the companies said.
The likely moves would end the monopoly of Videsh Sanchar Nigam Ltd., or VSNL, as the country's only global Internet access provider. The government said yesterday it would allow Internet service providers to get international access, instead of going through state-controlled VSNL.
''It gives unrestricted access and lesser customer problems,and brings down costs as well,'' said S.D. Saxena, senior financial adviser, MTNL in an interview.
VSNL's monopoly has stunted growth of the Internet in India, with many computer users turned off by heavy traffic and poor connections. The changes would give Internet service providers their own high-speed phone lines connected with overseas operators, bypassing VSNL.
An international gateway will ''increase their presence substantially in the Internet market and they can also lease out their gateways to other service providers,'' to help them make more money, said Jayesh Parekh, an analyst at SMIFS Securities in Mumbai.
Satyam's Push
Satyam Infoway plans to set up its direct global access for its Internet service users in eight to ten weeks at an estimated cost of 1 billion rupees ($23 million), said R. Ramaraj, managing director, Satyam Infoway, in an interview.
For now, as with other service providers, Satyam uses the services of its biggest competitor, VSNL, to get global access for its Internet services.
Better quality Internet access will help Satyam increase the numbers of its users and boost sales, according to Ramaraj.
The company proposes to fund this plan through its vendors and is ''also exploring the possibility of debt financing,'' Ramaraj said.
Satyam Infoway is a subsidiary of Satyam Computer Services Ltd., one of India's most profitable computer companies.
There is expectation that Satyam Infoway may list its shares on Nasdaq and Satyam Computer Services is likely to sell up to 51 percent of its stake in the Internet service provider, analysts said.
''This money will be used by Satyam Computer to reduce its debt,'' said Parekh.
Its stock rose 30.50 rupees to 1436.00 in recent trading on the Mumbai Stock Exchange.
MTNL Plans
MTNL pays about 30 million rupees a year to VSNL for providing it global access, Saxena said.
The fixed-line phone service, which began to offer Internet services from February this year, is ''exploring the possibility,'' of getting direct global access, he said.
The infrastructure to set up the global access and the connectivity will cost between 100 million and 200 million rupees. MTNL could get international access in about three months once it secures government approval, Saxena said.
There'll be an estimated 2.6 million Internet users in India by the end of this year, up from 535,000 users in 1998, according to the National Association of Software and Service Companies.
MTNL's stock rose 0.60 rupees to 223.70 and VSNL's stock was unchanged at 1100 on the Mumbai Stock Exchange. |
