Several of the countrys top corporate groups including the Tatas, the Birlas and Reliance have evinced interest in picking up an equity stake in the nearly Rs 2,000-crore regional telecom hub project of Videsh Sanchar Nigam (VSNL), Indias international telecom carrier.
The Tatas, A V Birla group and Reliance are among some ten respondents to a request for proposals from Infrastructure Leasing & Financial Services (IL&FS), which has been mandated to recommend a local joint venture partner (holding some 20 per cent equity stake) for the VSNL project. Unconfirmed reports said Essar group was among those which responded to the IL&FS letter. Even as IL&FS is expected to recommend a domestic investor, Reliance is being tipped to bag the domestic investor tag in the VSNL regional hub project. Sources accused IL&FS of rushing through what they called an insta-parade while shortlisting the domestic investor.
We were asked to respond within 48 hours to a project this large. The commitments could be anything between Rs 200 to Rs 400 crore in equity alone. Besides, other qualifying criteria such as presence in the telecom industry have not been spelt out clearly, one industry insider said.
VSNL proposes to place some 20 per cent equity in the regional hub JV to a domestic investor. It plans to reserve up to 25 per cent for an international partner and keep 25-30 per cent with itself. The remaining 25-30 % may be hawked to public or other participants in the JV like IL&FS itself and ISRO. When VSNL floated a global tender inviting joint venture partners for its South Asian regional hub project in August this year, Reliance had strongly criticised the decision to invite only foreign telecom majors. It had sent a letter to the department of telecommunications (DoT) and VSNL complaining against the move.
Seven telecom carriers submitted bids in mid-October in response to its global tender. The 7 bidders were: the British Telecom-MCI combine; Cable & Wireless; the Global One consortium (co-mprising Sprint International, Deu-tsche Telekom and France Telecom); Hutchison Telecom; Canadian Teleglobe Internat-ional; Australian Telstra Intern-ational and North American Gateway, an NRI firm operating under the brandname, NextAge.
The VSNL venture envisages development of India as a regional hub for voice and data telecom traffic. The project envisaged linking up a trans-Eurasian cable to South Asian countries like India, Sri Lanka, Bangladesh, Myanmar and, possibly, Mauritius and Pakistan.
This would be done by setting up a high-capacity fibre optic submarine cable from Karachi to Calcutta that would have landing points in Mumbai, Ernakulam and Calcutta with spurs or offshoots running off to Mauritius, Sri Lanka, Bangladesh and Myanmar. A Jalandhar to Lahore land-cable was also proposed in the venture.
About five per cent of regional telecom traffic is expected to be routed through the hub that will translate into cumulative revenues of some Rs 3,000 crore in foreign exchange over a ten-year period. The revenue-sharing of this transit turnover was to have been worked out on a 90:10 per cent basis in favour of VSNL.
Apart from this, the JV will also garner revenues by way of leasing or renting circuits to the telecom administrations of other countries. Such lease revenue to accrue from VSNL itself and from other telecom administrations in the region is expected to be of the order of another Rs 2,500 crore.
