VSNL may sell 2.6% stake in New Skies for $ 25 mn

Blackstone group wants to hold 100% equity in the company

The Tata-controlled Videsh Sanchar Nigam Ltd (VSNL) may rake in around $25 million in cash as The Blackstone Group is prep-aring to acquire the long-distance operator's 2.6 per cent holding in New Skies Satellite.

"Blackstone wants to hold 100 per cent equity in the company. So VSNL will be offered to give up its stake in it," Daniel S Goldberg, chief executive officer of New Skies Satellites, told Business Standard.

The Blackstone Group is ready to pay $956 million in cash for the complete holding in New Skies Satellites. This will see VSNL getting approximately $25 million, proportionate to its 2.6 per cent equity in the company.

This will be the second satellite service provider in which VSNL will be divesting its stake, the first being Intelsat, in which it held a 5.4 per cent stake valued at Rs 780 crore.

New Skies Satellite is one of the four fixed satellite communications companies with global satellite coverage, offering video, data, voice and Internet communications services to a range of telecommunications carriers, broadcasters, corporations, Internet service provi-ders and government entities. It has five satellites in orbit, ground facilities around the world and an additional spacecraft under construction.

New Skies Satellite sees India as a major market for it. In 2003, about 7 per cent of the company's global revenue came from India, which is expected to go to the double-digit figures in 2004.

According to Goldberg, the satellite company expects India to be one of the biggest markets for it in the world, with broadcasting and communication market in the country expected to grow rapidly.

In India, with the opening up of the direct to home (DTH) broadcasting service, New Skies is expecting major push for its operations. India's two DTH service providers, state-owned Doordarshan and ASC Enterprises, are using New Skies' satellite NSS 6.

Its second satellite is being used by Sun TV, Reliance, Data Access and the Software Technology Parks of India.

With the proposed new satellite by the second half of 2005, the company expects a better coverage of the Indian subcontinent.