Rediff On The Net, Infotech: The Rs 10 billion freedom


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October 8, 1997

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The Rs 10 billion freedom

Telecom major Videsh Sanchar Nigam Limited can now enter into joint venture agreements worth over Rs 10 billion. This is the outcome of a recent memorandum of understanding signed between VSNL and the Department of Telecom. With several large joint ventures lined up, VSNL is expected to benefit considerably from the new freedom.

Senior VSNL officials said "With autonomy we can line up unlimited capital expansion plans and joint ventures up to Rs 10 billion. With investment allowed up to 5 to 15 per cent of our net worth, we can easily go for three

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joint ventures of Rs 10 billion each."

VSNL is also the first public sector undertaking of the government to get shareholder approval to amend the articles of association that gives the board additional powers to utilise benefits under the Navratna status.

According to VSNL officials: "Autonomy with accountability and audit is the best thing which can happen to any organisation."

In addition to assigning greater powers and freedom to the company, the agreement outlines the performance targets for VSNL, defines the levels of commitment from the DoT in support of VSNL's efforts and recognises projects of key importance to VSNL's performance in the current year. VSNL will also have the freedom to decide on the transmission medium and establish its own links for inter-connecting its gateways to earth stations.

It will also have the freedom to provide any value-added service, network or consultancy services, either on its own or in association with parties, both from India and abroad, internationally as well as domestically, through a separate subsidiary or a joint venture.

Telecom watchers say the DoT pact signifies two things. First, by granting autonomy the DoT is nurturing VSNL to face competition that might be introduced sooner or later.

Second, and more importantly, it would send positive signals to international funds that have, for long stayed away from investing along with VSNL.

The VSNL has also undertaken to achieve a 99 per cent network availability, with an outgoing answer to seizure ratio of 48 per cent. For incoming calls, ASR of 41 per cent has been targeted for metros while for the rest of India the level has been set at 21 per cent.

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Die Hard: VSNL lives!

- Compiled from the Indian media

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