It makes sense for VSNL to increase its stake as Inmarsat's transformation into a private entity will enable it to take quick decisions on newinvestments and arrange funds for its future expansions, sources added. Officials said the existing share of VSNL will be transferred as ordinary shares to Inmarsat Holding Plc, allowing India to remain a signatory and approve amendments to the convention/operating agreement of Inmarsat. Under the restructuring, a new holding company christened Inmarsat Holding Plc and an operating company called INMARSAT Ltd will be created. "This will help Inmarsat face competition more effectively, while allowing India to continue availing the international mobile communication service through the new company," said sources.

Officials said that the 13th extraordinary session of Inmarsat assembly has decided to implement the new structure with effect from April 1, 1999. The revised entity will have a two-tier structure subject to UK regulation which will enable Inmarsat Ltd to raise finance, particularly debt finance more efficiently.

Sources said that the company will offer an initial public offering (IPO) within twoyears of its restructuring. The existing signatories of Inmarsat, which comprises 86 member countries, will become shareholders in the new company with each shareholder receiving shares in proportion to its investment share in Inmarsat.

The restructuring will eliminate the need to depreciate goodwill and difference between market value and net book value of assets through new Inmarsat's profit and loss account. It will also provide flexibility for raising finance and minimise stamp duty rising on transition.

All assets of the existing Inmarsat will now be transferred to the new company. At present there are five third-generation satellites, 187 land earth stations (LESs) and 80 shared LESs providing full range of Inmarsat services. The number of terminals commissioned so far are 150,000, with revenues for 1997 amounting to $377.9 million with surplus income of $127.1 million. The new company, will however, not have any privileges and immunities related to matters like taxation from Inmarsat employees, aswas the case earlier. It will have the same status under national regulation, the World Trade Organisation (WTO) and in the international telecom union (ITU) as any private competitor.