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VSNL climbs down, may invest elsewhere

BS Economy Bureau in New Delhi

In a major climbdown, Videsh Sanchar Nigam Ltd has accepted both the major demands raised by the department of telecom to broaden the scope of the board sub-committee and to include the government nominee in it.

S K Gupta, managing director, VSNL, in a letter to DoT has also said the company is willing to explore any additional investment opportunities the government might suggest.

"In keeping with the suggestion in your letter and our common interest in strengthening VSNL in the coming years, we would have no objection to broadening the scope of the committee to include the identification and quantification of any additional investment opportunities perceived by the government as being more attractive than the various options considered by the management, which resulted in the investment proposal that was made to the board on 28 May, 2002," Gupta has said in his letter.

The VSNL board committee should complete its deliberations on such alternate options by July 15.

"Should these deliberations identify an option or options that are quantifiably better than the proposal approved by the board, the committee should place these before the board for its consideration. On the other hand, if the committee is unable to identify and quantify alternate investment options that are more attractive than the one already approved by the board, the committee's mandate would be to implement the board decision of 28 May,'' the letter adds.

Responding to the claims of Rakesh Kumar, a government nominee on the VSNL board, that vital information was withheld from him, Gupta has said the agenda clearly stated there was a proposal to consider inter-corporate investment up to the level of Rs 12 billion in the share capital of an Indian company holding a basic operator's licence. Further, the agenda papers were delivered by hand on May 21.

Gupta has said VSNL wanted to enter basic telephone service operations and had even applied for a basic service licence, which was not granted by the government.

With the termination of VSNL's monopoly in ILD services, it has become essential for VSNL to get access to the end-user, the letter adds.

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