The Tatas and the Videsh Sanchar Nigam (VSNL) will soon thrash out strategies in order to avoid competition in the Internet access market, where Tatas and VSNL have a major presence, following the acquisition of a 25 per cent holding in the international telephone carrier.
"At present, both the Tatas and VSNL have Internet service provider (ISP) operations and they are trying to avoid competition as Tatas have a strategic stake in VSNL. We will come out with a suitable strategy in order to synergise the entire operations," a top VSNL executive said.
The main objective of the gameplan will be to save funds incurred by operating two ISPs while avoiding competition that could eat into their existing marketshare. The Internet access market is highly competitive because of the surfeit of operators and the ongoing Internet rate cut and aggressive marketing.
VSNL is one of the leading ISP player in the country with an Internet subscriber-base of close to 9 lakh, while Tata Internet, which is being merged with the group's basic telecom operator - Tata Teleservices, is targetting around one lakh retail users by the end of the current fiscal.
VSNL has already spend around Rs 100 crore for expanding its Internet services across the country. It has also a number of tie-ups with telecom companies for several value-added services.
According to Tata executives, the group will retain the VSNL brand name and will try to utilise the capabilities of VSNL management in all its future projects. The acquisition of VSNL stake has already helped the Tata group become the largest integrated telecom company in the country.
Earlier, VSNL had been toying with the idea of spinning off the ISP division as a separate company in order to prepare for an overseas listing. But in the wake of the technology stock meltdown, the company decided against the move. Internet and other value-added services form around 10 per cent of the revenue of VSNL, while the rest comes from international telephone calls.
