VSNL eyes 2-fold rise in revenues

Videsh Sanchar Nigam Limited (VSNL), the internet and telecom company, has set a target to double its revenues to $4 billion by March 31, 2012, by venturing into the high-margin network management outsourcing and enterprise business. The company is looking at jointly providing services through its sister concern Tata Consultancy Services (TCS).

VSNL will move from being a pure provider of connectivity to enterprise businesses in the next five years. The company would also look to offer managed services and foray into business process outsourcing (BPO), VSNL said in a presentation made to analysts.

The BPO business will mainly provide network management services to corporate customers in the country. This is a niche segment, where only global telecom companies were operating earlier.

These are high-margin sectors, and with its outlook of posting 15 per cent compounded annual growth rate (CAGR) every year till 2012, VSNL is aiming at crossing the $4-billion mark, it said.

For the year ended March 31, 2007, the Tata group company posted revenues of around $2 billion.

The company has earlier launched its managed services offerings and will continue to launch additional services through TCS.

When contacted, a senior company executive said, "VSNL continues to evaluate inorganic growth opportunities that will enhance its global enterprise solutions strategy, and at the same time, focus on integration and consolidation of the existing businesses to ensure world-class service benchmarks".

These plans follow its recent re-engineering of business models through acquisitions of submarine cable companies Teleglobe International Holdings and Tyco Global Network. At present, VSNL is one of the largest owners of submarine cable bandwidth in the world and a global player in wholesale voice services.

At the time of VSNL's divestment in 2002, 90 per cent of its revenues came from international long distance calls that were originating and terminating in the country. As on March 31, 2007, the company's revenue mix comprised 66 per cent from wholesale business, 29 per cent from the data business and 5 per cent from retail internet business and others.

Further, over 50 per cent of its overall revenues come from international operations with 25 per cent of its employee strength of over 4,000 located outside the country. The company's revenue mix in the next few years is expected to witness further change with wholesale business accounting for 40 per cent and the balance coming from other businesses.