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August 7, 1997


Wipro, BT war gives birth to Wipro VANS

Wipro Infotech group is creating a new arm called Wipro VANS (value-added network system) division as a spin-off from its existing 50:50 joint venture company Wipro-BT. This follows a recent decision to part ways with its UK partner, British Telecom.

Anand Talwai, chief executive officer of Wipro-BT, will head the new division after the split is formally announced.

Even as Wipro Infotech takes this decision, there are no improvement in the talks between Wipro and British Telecom as both sides are said to be pushing hard bargains over the consideration price at which Wipro is to dispose off its 50 per cent stake in the joint venture.

While Wipro is said to have maintained that it is actually expecting a marginal profit this year and may break even, the position seems to be at variance with BT.

However, sources do not rule out the possibility of Wipro-BT ending up making more losses for the year-ending March 1997, than the previous financial year despite the present account position showing the contrary.

This is in stark contrast to the earlier expectations of the joint venture making further losses of around Rs 150 million against the loss of Rs 68 million estimated to be made in 1995-96.

Sources say Wipro-BT itself expects to double its first year's loss during 1996-97 and news of the joint venture actually making a marginal profit came as a surprise to many. However, sources maintained that the current book position shows a much better position than the last financial year.

While Wipro-BT remains tight-lipped about the consideration price being negotiated with British Telecom, the Indian partner is said to be striking for a hard bargain in view of the venture's number two position in market for VANS connections.

Sprint RPG currently reigns as market leader for this business in the country.

While the joint venture has done around 150 VSAT connections, around 10,000 VANS connections have also been achieved so far.

The feeling at Wipro is that since the infotech group has done well in the VANS segment, basically an information technology related business, it should get a better price.

The joint venture recently received the Foreign Investment Promotion Board's clearance for increasing its stake from the initial Rs 180 million to Rs 350 million. Originally, the plan was to raise it to Rs 600 million which fell through following the decision to part ways.

While Wipro will handle the VANS business, BT is expected to take care of VSAT for which, it is said to be negotiating with Bharti Telecom for a separate venture.

Both joint venture partners are expected to announce their formal split after finalising their negotiations by the middle of August.

- Compiled from the Indian media

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