The Hindu Business Line : Tatas serve legal notice over VSNL compensation issue

THE Tata group has served a legal notice to the Union Government on its long-standing demand for a suitable compensation package for Videsh Sanchar Nigam Ltd (VSNL) for advancing the deadline for opening up the international long distance (ILD) sector by two years to 2002.

The move comes after the company had made numerous representations to the Department of Telecom (DoT) to settle the compensation quickly, as the three-year deadline, as mentioned in the shareholders purchase agreement, ends in February 2005.

The Tata group has been seeking a compensation package from the Government for over two years.

The company had said that the Government had not given it a chance to negotiate the compensation package for VSNL before signing the agreement to buy a part of the Government's stake in the long distance services company.

The Government, on its part, maintained that the agreement was arrived at in a transparent manner and the strategic partner was aware of the Government's policy while signing the dotted line.

The 43-page notice is a precursor to the company filing a suit in court against the Government.

One of the primary concerns for the Tata-managed VSNL is losing out on the ILD traffic from Bharat Sanchar Nigam Ltd's (BSNL) network, which has already taken its own ILD licence and plans to launch its service independently by next year.

While the compensation package offered by the Government had stipulated that BSNL and MTNL would route their ILD traffic through VSNL till 2004, the Tata group wants a long-term arrangement with the two public sector companies, which together own nearly 60 per cent of the country's telecom network.

The Government also gave VSNL a licence to offer national long distance services and Internet services without any entry fee.

Meanwhile, the DoT has sought opinion from the Solicitor General on the issue of de-merging the surplus land belonging to VSNL into a separate company.

There is a view within DoT that the Tatas may be taking legal recourse to the compensation package as an indirect way to create a situation where the Government is faced with restrictions to settle the surplus land with VSNL.

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