VSNL has become a global player from being an India-centric one

Updated: Jul 30 2006, 05:30am hrs
VSNL Limited, a Tata group company, on a standalone basis has posted revenues of Rs 3,781 crore with net profit of Rs 480 crore for FY06. Rajiv Dhar, chief financial officer, VSNL Limited, spoke to Rutu Chhabria of The Financial Express on how the international acquisitions have put the company on the global map and how the consolidated picture will look like. Excerpts:

The year FY07 will be the first full year of operations after Tyco and Teleglobe acquisitions. How have these acquisitions strategically benefited VSNL

The two acquisitions have catapulted VSNL to the level of a global player in wholesale telecom services, both voice and data. We now have a global submarine and terrestrial network that spans over 2,00,000 route km.

The Teleglobe acquisition has made VSNL the world's largest player in wholesale voice carrying nearly 18 billion minutes of traffic annually. The two acquisitions are complimentary in nature. TGN acquisition gave VSNL access to a large, technically advanced submarine cable network, allowing the company to offer enterprise and carrier data services across geographies. The acquisitions are also synergistic and will help VSNL derive significant benefits arising out of operational consolidation and economies of scale.

From a larger perspective, the two acquisitions have resulted in the re-engineering of the business model of the company into a global player from being an India-centric one. VSNL is now India's first truly global telecommunication company.

This has been independently recognised in a recent study by the Boston Consulting Group, which has identified VSNL as an emerging global challenger, one of the top 100 companies from rapidly developing economies that are going global and changing the world.

What would be the consolidated revenues of the company in FY07 When do you see these companies contributing to the bottom line

VSNL's consolidated revenues for 2005-06 were about Rs 4,800 crore whereas on a proforma basis, the consolidated revenues were about Rs 9,000 crore. The top line is expected to grow in line with the growth in all the business segments. As regards bottom line, the company has taken necessary initiatives to improve its performance. The two acquisitions are expected to contribute to the bottom line in the next 12 to 18 months.

After your recent acquisitions, VSNL has achieved a global presence. Geographically, where do you see growth opportunities emerging

It is difficult to pinpoint one particular geography as a growth area. The two acquisitions have transformed the business model of the company and made it a global player from an India-centric company. The company now has strong presence in North America, Europe and Asia Pacific regions. It is also in the process of rolling out a wide range of telecommunication services (except mobile telephony) in South Africa through a strategic investment.

Out of the wholesale voice segment and enterprise and carrier data segment, which segment offers higher growth

In the wholesale voice segment the company is already the global leader, carrying nearly 18 billion minutes of traffic annually. We believe that the enterprise data segment, both in India and overseas offers a very good potential for growth.

VSNL has recently received franchisee rights to run cyber cafes at railway stations. Can you tell us about the strategy behind these outlets By when will these outlets become operational

India is among the world's fastest growing economies driven largely by its expertise in IT and telecom. India is experiencing the need to be continuously connected. The cyber cafes are a step towards this, as consumers can now stay connected even while on the move. Consumers can use the cyber cafes to make train bookings, check their bank statements, track their investment portfolio and make international calls at affordable price points. This will also help VSNL fulfil the promise made in the Union Railway Budget speech of setting up such cyber cafes at all leading stations across the country.

Some of the cyber cafes including those in Bangalore and Hyderabad are already operational and the other cyber cafs will become operational over the next few months.