Financial Daily from THE HINDU group of publications
Thursday, May 30, 2002
Info-Tech - Telecommunications
VSNL: Govt nominee `opposed' it
NEW DELHI, May 29
IN what could lead to further complications for Videsh Sanchar Nigam Ltd (VSNL) in its spat with Union Communications Minister, Mr Pramod Mahajan, the Government nominee on its Board, Mr Rakesh Kumar, has shot off a letter to the Managing Director, Mr Mr S. K. Gupta, stating that he does not stand by the decision to invest Rs 1,200 crore in Tata TeleServices Ltd.
According to official sources, Mr Kumar noted that the company was "untruthful'' in stating that the board had taken a unanimous decision in this regard. He had opposed the decision at the board meeting and would continue to oppose it as the Government considers it to be a case of asset-stripping, and not investment in tangible assets, he said.
Mr Kumar added that the agenda paper for the board meeting did not specify the investment plans and as such he was kept totally in the dark until the issue came up for discussion. Moreover, the agenda item was not circulated one week in advance as was being claimed, but much later in violation of the relevant provisions of the Companies Act, he said.
Officials in the Department of Telecommunications (DoT) also continued to stick by the Minister's stance, stating that the surplus reserves of VSNL were meant for the payment of the companies' GDR issue. It was also sought to be used for investment in the national long distance operations, for which the company has already been given the nod. It would, therefore, be a gross violation of the disinvestment process if this amount were transferred to a group company of the Tatas, they said. Meanwhile, in a related development, VSNL has also run into trouble with the largest telecom operator Bharat Sanchar Nigam Ltd (BSNL).
The company has run up bills of Rs 1,050 crore, as "pass-through'' charges for making use of BSNL's network for delivery of incoming international calls. While VSNL owes Rs 700 crore to BSNL for the time period until December 2001, the bill for the first three months of this year comes up to Rs 350 crore.
As VSNL has not cleared the dues, BSNL has refused to extend the interconnect pact to deliver the international calls until the full amount of Rs 1,050 crore is paid upfront, the sources noted.
According to sources, for every international call that a BSNL subscriber makes, the company pays a revenue share to VSNL for routing the call through its gateways. Similarly, for every incoming call, VSNL hands it over to BSNL for termination and pays a portion of the revenue earned.
Since incoming calls outnumber the outgoing calls, it is invariably VSNL which has to pay up at the end of the time period.
In response to the demand, VSNL had promised to pay the dues this month. But following its decision to invest Rs 1,200 crore in Tata Teleservices, BSNL has now decided to approach DoT to intervene in the matter and ratify its decision, the sources said.
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