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VSNL ready for new ventures

Mumbai, Sept. 2: Videsh Sanchar Nigam Ltd (VSNL) is eyeing new business initiatives to shore up its topline due to shrinking revenues from its international long distance (ILD) telephony business.

The company would make foray into corporate data business and internet-related services, VSNL chairman Ratan . Tata told shareholders at the annual general meeting here today.

VSNL has earmarked Rs 200 crore as capital expenditure in 2003-04 for its new initiatives.

“As the company had anticipated, the immediate effect of competition in the ILD segment was a fall in settlement rates, interconnect rates and call tariffs,” Tata said.

The government had allowed private players into the ILD business from April 1, 2002, and by July 2002, VSNL had two competitors.

The immediate fallout was that rates fell by over 50 per cent within six months.

It came on top of VSNL's earlier tariff reductions effective from April 1, 2002, with a peak rate reduction of around 15 per cent. There was a simultaneous fall in settlement rates for incoming ILD traffic.

“Our ILD business will be under pressure with the emergence of new players, including Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL),” Tata said.

VSNL, however, tried to protect its traffic volumes, though revenues per minute and margins declined, he added.

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