VSNL reduces investment in Tata firm
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VSNL reduces investment in Tata firm

Tuesday, 22 October 2002, 07:00 Hrs
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NEW DELHI: India's newly privatized telecom giant Videsh Sanchar Nigam Ltd. (VSNL) Monday said a committee appointed by its board has decided to reduce its investment in another group company.

The committee has decided that VSNL, India's biggest overseas telephone services provider, would pick up only 19.9 percent equity in Tata Teleservices by investing 8.36 billion, said a VSNL press statement issued here.

The VSNL board had earlier decided to pick up a 26-percent stake in Tata Teleservices for 12 billion. Both VSNL and Tata Teleservices are part of India's diversified Tata group.

The private sector Tata group in February bought a 25-percent stake in VSNL from the Indian government. The Tatas have followed this up with an open offer to buy a further 20 percent from minority shareholders.

The government still owns about 26 percent in VSNL.

The communications ministry had slammed VSNL's decision to invest in Tata Teleservices, accusing it of violating the shareholders agreement reached between the Tatas and the government after VSNL's privatization.

Tata Teleservices provides fixed-line telephone services in Andhra Pradesh. It has a license to operate basic services in New Delhi, Tamil Nadu, Karnataka and Gujarat.

The VSNL board had constituted a committee to go into the modalities of the VSNL investment in Tata Teleservices Ltd.

"After examining additional opportunities, the committee re-affirmed the viability of the investment in Tata Teleservices, and placed its findings before the board at its meeting on Monday," said the VSNL statement.

"The committee has decided that VSNL's equity contribution over a seven year period would be 8.36 billion.

"An amount of 6.37 billion will be disbursed over the first four years with the remaining amounts to be disbursed as per a time table and mode to be decided mutually between Tata Teleservices and VSNL."

VSNL, which is also a leading provider of Internet services, said Monday its July-September net profit dropped 33 percent to 2.46 billion on sales that fell 22 percent to 12.48 billion.

The company, which gets 90 percent of its revenue from overseas calls, lost its monopoly on international telephony in April.
Source: IANS
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