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May 26, 1997


VSNL to grab more hubbing partners

The Videsh Sanchar Nigam Limited has plans to rope in two more global partners who can effectively form a hub for India's communications with the world.

The International telecom carrier has also commissioned a merchant bank for an independent report on the choice of the partners despite zeroing in on NTT, the Japanese telecom service provider as the pan-Asian partner and MCI as the pan-Americas partner.

According to the long-term plan of VSNL since hubbing of telecom networks and route is going to be the order of the day in international telecommunications, the company needs partners in all regions of the world to be an effective hub and retain its share of call rates.

To be an effective hub the VSNL needs a pan-Americas partner, a pan-Europe partner and a pan-Asia partner. This would help them cover the globe and have global products expertise and capital.

According to the present plans VSNL has already finalised its deal with British Telecom as the pan-European partner and is awaiting the government's clearance for the joint venture.

The company plans to establish a joint venture with the partners and form new companies to effectively establish the hub for their regional communications.

The VSNL defended its alliance with British Telecom and said it is not a backdoor entry. The VSNL is an equal partner with BT and MCI in the venture and the partners share the risk of the project equally. The venture is subject to all approvals as any other company in India would be and the focus will be on hubbing, enhancing and portfolio services.

The venture will position VSNL as an international hub, provide managed bandwidth and value-added services and get investment for infrastructure, the VSNL said.

Pointing out that global alliances worldwide is the norm, a VSNL document said that India has remained isolated in the regional scenario and the traffic flow to the region is low compared to other regions in Asia due to the emerging hubs in those regions.

In the current scenario of international telecommunications, all countries have links with all others and in future hubbing situations only hub between points connecting various regions will gain market advantage.

The VSNL defended its plans for a strategic alliance, saying that the global scenario in telecommunication involves mergers, acquisitions, joint ventures, alliances, partnerships and cross-equity holdings.

There is a paradigm shift imposed by technological developments, globalisation of market need, dergegulation and privatisation. The new shape of the telecom industry will be born out of merging of computers, telecom, broadcasting and the Internet to form a total communications infrastructure.

This is the context in which VSNL is planning its alliances with British Telecom and others. The alliances, it said, will position the company for competition, create an organisation operating on commercial principles and increase global market share and revenues.

- Compiled from the Indian media

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