VSNL in a hurry
vsnl.net.in
VSNL to revalue, hive off ISP arm
Harshad Oke (Fe)
MUMBAI 21 OCTOBER
TELECOM major Videsh Sanchar Nigam Ltd (VSNL) is in the process of appointing one of the Big 5 consultancy firms to conduct a valuation exercise for its value-added business and to help draw a spanking new business plan.
The exercise is aimed at transferring the value-added business to its wholly-owned subsidiary, VSNL Seamless Services Pvt Ltd and hive it off as a separate company. And, given the success enjoyed by the Satyam Infoway American depository shares, VSNL seems to be in a hurry to list VSNL Seamless either on Nasdaq or the New York Stock Exchange.
Speaking on condition of anonymity, a senior VSNL official said: "We want to get over with the exercise within six months. We still need government approval, but that is a mere formality as our articles of association have now been amended to allow such a move." The valuation and business model exercise is a crucial one for VSNL.
Currently, the value-added business is worth only Rs 175 crore ($39 million), out of VSNL's total turnover of over Rs 7,175.57 crore ($1.6 billion).However, the figure does not include any tangible assets such as equipment and intangible assets such as goodwill. Says a source: "We want to get a good valuation, as we want to make it completely separate. If we are not careful about our valuation exercise, we won?t get a good price."
VSNL says it is serious about separating VSNL Seamless.The ISP policy limits foreign equity investments up to a maximum of 49 per cent and VSNL is not averse to it.
Currently, VSNL Seamless has an equity base of nearly Rs 100 crore, which too might be recast, keeping the plans in mind. VSNL also wants to provide Internet services on its own, internationally. That too without limiting itself to being just an access-only player.
Said a source: "We have received interesting proposals to set up an ISP business in Bangladesh, Yemen and some other Arabian countries." The company is also girding up to explore other revenue streams such as advertising, e-commerce and Internet banking. Apart from spreading its access business, VSNL is also seeking tie-ups with banks to offer Internet banking.
On the e-commerce front, VSNL primarily wants to be a secure network services provider, where it will offer secure hosting services for other e-commerce players. This is akin to the Internet data centre model. But the focus for the time being is international. |
