The share price of public sector telecom major Videsh Sanchar Nigam Ltd (VSNL) witnessed a spurt today after the company's announcement yesterday that it is considering an interim dividend.
The stock price jumped over 3 per cent to close at Rs 239.15 on the Bombay Stock Exchange (BSE). The stock had touched a high of Rs 247 during the day.
The stock price had plunged last month after the government decided to allow unlimited competition in international long distance (ILD) telephony by establishing low entry norms for private players.
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"There are market talks that VSNL might come out with a huge dividend announcement -- anything between 70 per cent and 150 per cent -- given the fact that the company needs to streamline its reserves and surplus," a dealer said.
The VSNL stock price plunged 15.8 per cent to Rs 214.45 on November 19 following the announcement of the liberalised ILD entry norms.
The company said the 124th emergency meeting of the board of directors of VSNL will be held on December 14 to discuss the interim dividend for 2001-02.
Recently, disinvestment minister Arun Shourie said officials were working on a plan to distribute VSNL's huge cash reserves by way of a special dividend to shareholders before its privatisation.
The company paid a dividend of Rs 50 per share for fiscal 2001 which included a special dividend of Rs 40 per share.
The Centre is in the process of divesting a 25 per cent strategic stake in VSNL along with management control. The government recently announced the ILD norms incorporating the Telecom Regulatory Authority of India's recommendation for a low entry fee of Rs 25 crore and an annual revenue sharing of 15 per cent for international long-distance operators.
VSNL's monopoly in international telephony will come to an end with effect from April 1, 2002. Currently, VSNL derives a majority of its revenues from international telephony.
Analysts say while low entry norms are certainly a negative development for VSNL, it remains to be seen as to how many players actually enter the sector after the liberalisation.