Rediff Logo Infotech Banner Ads Find/Feedback/Site Index
June 16, 1998


Global One opts out of race for $500 m VSNL hub

Email this story to a friend. Global One - a consortium of Sprint, Deustche Telekom and France Telecom - has dropped out of the race to pick up a stake in the $500 million regional hub project of the Videsh Sanchar Nigam Limited.

The decision, likely to snowball into a controversy, has been intimated to the Telecom Commission.

Reluctant Technologist
Global One pulls out
IT slowdown recorded
Swisscom deal
This will leave the field open for the British Telecom-MCI consortium and Cable & Wireless, the remaining two contenders shortlisted for project late May.

The Telecom Commission is expected to make a final decision soon.

It is believed that Global One decided to withdraw from the run-up to the finalisation of a partner for the VSNL regional hub after it was asked to make a detailed presentation hurriedly before the Telecom Commission.

After being shortlisted late in May, BT-MCI, C&W and Global One were asked to make presentations within a week or so.

Such a short deadline did not allow Global One time to co-ordinate with all its three partners. Sources felt the paucity of time to make the presentations may give rise to another round of controversy.

In 1996, VSNL wanted to partner BT-MCI for the regional hub project, but was forced to adopt the open tender route after other telecom carriers cried foul. BT-MCI had done a detailed due diligence report of the project and is likely to be the best prepared to make the presentation before the Telecom Commission at such a short notice.

The hurried manner in which VSNL and DoT have sought to push through the final phase of partner-selection for the regional hub project has raised eyebrows.

The proposal to set up the $500-million sub-continental hub was made two-and-a-half years ago. The first round of tenders were submitted in October, which were evaluated in February and three consortia shortlisted in May.

Sources also point out that the timing of the final presentations does not inspire confidence in the transparency of the process.

Court rulings against VSNL and its Chairperson and Managing Director B K Syngal; Telecom Commission; and the Union of India are pending in the Bombay and Delhi high courts.

C&W, meanwhile, is optimistic about its chances in sewing the deal with VSNL. According to Country Manager Dinesh Dir "We have a strong global presence and have PTT (Postal Telegraph and Telecom) agreements with 50 countries, and thus can bring in more traffic into the country which would be beneficial for the joint venture."

C&W has also proposed to offer a number of value-added services and feels that it is a strong contender. It is currently giving final touches to the detailed presentation asked by the telecom commission and will be submitting it shortly, Dir added.

The equity structure of the regional hub project is yet to be decided; though it was mooted that VSNL and BT-MCI would have 40 per cent stake each.

Last year, IL&FS had been asked to help VSNL find an Indian partner, holding up to 20 per cent stake). Even that exercise was conducted in a hurry, giving rise to charges of favouritism.

Sources say the regional hub is not viable since the proposal is based on the assumption that the transit traffic would grow in the next two to five years. If the project is to attract more traffic, VSNL has to further reduce its telecom accounting rate by 50 per cent, which is unlikely in such a small timeframe.

- Compiled from the Indian media

Tell us what you think of this story