Acting chairman and managing director Amitabh Kumar told newspersons on Monday that the board of the company had only given an in-principle approval for investing in Agrani and the same was subject to review.

"We have asked Agrani to come back to us when they are ready to fulfil a number of conditions, including one that requires Lockheed Martin to invest at least $100 million in the project as a pre-condition to VSNL pitching in", said Kumar. He added that the VSNL board would meet to discuss the proposed investment once the company fulfills the same. However, Lockheed Martin has so far agreed to invest only $50 million in the project.

Subhash Chandra is expected to invest close to $140 million in the form of equity in the project, while VSNL had approved an investment of $50 million in the project.

Kumar was replying to aflurry of questions by newspersons over VSNL's involvment in a number of global mobile personal communication service (GMPCS) projects, including Iridium and ICO.

In its business plan submitted to the financial institutions, Agrani has envisaged a total project cost of $755 million (Rs 3,300 crore) with a 1:1 debt-equity ratio.

The company is expecting initial financial closure by the end of this year with 65 per cent of equity and rupee debt financing already in place.

The outgoing VSNL chairman added the company was planning to enter into a marketing agreement with British Telecom for the much-delayed South Asia hub. "We are talking to BT for a marketing tieup only as yet and expect the proposal to come through in the next four to five months", he added.

Kumar said that VSNL will leverage its existing infrastructure for a wide range of value-added services. For that, an amount of Rs 3,130 crore will be invested during the ninth five-year plan, he said.

"The corporation's emphasis will be toimprove the quantity and quality of telecom services," he said, and to this affect Rs 1,860 crore will be for exploring new business opportunities and Rs 830 crore for value-added services like data communication services, satellite mobile communication, video conferencing, television relay and internet access.

Kumar said that VSNL's international traffic had increased 16 per cent in June as a result of the drop in tariff rates as recommended by the Telecom Regulatory Authority of India (TRAI).

"VSNL will develop its principal business of providing international telephony services in a manner that meets the full demand for such services, optimises the usage of and revenue from these services, positions it to play a significant role in an increasingly liberalised environment and expands its transmission capacity to emerge as a hub, or carriers' carrier for the South Asia region", said Kumar.

VSNL has signed agreements for participation in the global routing network Project Oxygen and in the South Africaand Far East (SAFE) undersea optical fibre system. It also plans to set up seven new satellite earth stations in the near future.