Videsh Sanchar Nigam (VSL)

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David Weissman

www.zacks.com

Videsh Sanchar Nigam, Ltd. (VSL) is India's leading provider of International Telecommunication and Internet Services. The company was incorporated on April 1, 1986 as a wholly-owned government corporation to take over the activities of the government-controlled Overseas Communication Service (OCS). The company operated under the auspices of the Government of India until 1992. Between 1997 and 1999, the Government of India divested its equity holding through the issuance of global depositary receipts ("GDRs"). These GDRs were converted into American Depository Receipts (ADR's) upon the company's listing on the New York Stock Exchange (NYSE) on August 15, 2000. In February 2002, the Government selected Panatone Finvest Limited as its strategic partner following a competitive bidding process. Panatone Finvest Limited is in turn affiliated with the Tata Group of companies and its shares are held by Tata Sons, Tata Power, Tata Steel and Tata Industries. As a result, VSL is a part of the Tata Group, which comprises 93 companies in more than 40 countries spanning six continents. As of March 31, 2007, the Tata Group owned 50.11% of the total equity while the government owned 26.1%.

VSL provides international telecommunications services in India by directly connecting domestic telecommunications network to approximately 240 international destinations. Its main gateway centers are located in Mumbai, New Delhi, Kolkata, Chennai, Ernakulam, Gandhinagar, and Jalandhar. The company has fourteen other international points of presence (POPs), which carry communications traffic within India and around the world. VSL has established relations with approximately 80 global carriers.

Starting from 2005-2006, the company reported consolidated financial results. The consolidated financial results include the impact of acquisitions made in 2005 (Tyco Global Network, Teleglobe, and VSNL Broadband Limited) from their respective acquisition dates. The company organizes its activities along four reportable segments: Wholesale Business (approximately 35% of 2006 revenue), Enterprise Business (approximately 26%), International (approximately 22%) and Others (approximately 17%). The "Wholesale Business" segment consists of ILD telephony services while the "Enterprise Business" segment comprises services for corporate data transmission. Other services include National Long Distance (NLD) and Internet services. VSL's international investments are through its wholly-owned subsidiary, VSNL Singapore Pte. Limited, headquartered in Singapore. VSNL is the only Indian ISP to be a member of the Wireless Broadband Alliance (WBA), a leading global consortium of Wi-Fi service providers. It has been a leading contributor in developing the wireless market in India and has drawn up a number of initiatives leveraging the alliance.

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