VSNL sues govt

Videsh Sanchar Nigam (VSNL) on Thursday filed a lawsuit against the central government at the Bombay High Court. This was to seek compensation of Rs 2,560.72 crore for premature termination of its international long distance (ILD) monopoly.

In its petition, the Tata group company said the government failed to keep its commitment that VSNL would be allowed to retain its monopoly in ILD telephony market till March 31, 2004.

DoT, through a letter dated July 28, 2000, had terminated VSNL's monopoly in voice telephony by 2002, two years ahead of the promised date, the petition claimed.

DoT had offered a compensation package to VSNL and admitted that premature termination could cause prejudice and monetary loss to the company. It had also offered additional compensation in case the loss in revenues was proven by an independent consultant.

Credit Suisse First Boston (CSFB) and Salmon Smith Barney (SSB) - the lead managers for VSNL's global depository receipts in 1997 and 1999 respectively - had been entrusted with the job of assessing the losses in September 2000 by the government and VSNL.