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Rediff.com  » Business » VSNL plans Rs 8,000 cr global expansion

VSNL plans Rs 8,000 cr global expansion

By BS Reporter in Mumbai
February 14, 2008 12:10 IST
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Videsh Sanchar Nigam (VSNL), which was on Wednesday rechristened as Tata Communications, will invest over $2 billion, or Rs 8,000 crore, in the next three years for global expansion plans. The company will make the investments in submarine cables, network expansion and rolling out of WiMax services.

Tata Communications integrates VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit (TIEBU) and Cipris brands under its fold. The decision to rename the company was approved by the board of directors on December 14, 2007. 

"We will invest around $1 billion in the submarine cable and WiMax businesses, and another $1 billion for network expansion. The investment will be made with internal accruals," Srinivasa Addepalli, senior vice-president (corporate strategy), Tata Communications, said.

The company is a part of a consortium that is laying a submarine cable system between India and France - India-Western Europe-Middle East (I-ME-WE) - and would invest around $45 million in the project. The consortium comprises 10 companies, of which the Indian partner is Bharti Airtel.

Tata Communications had earlier announced a $250 million investment in TGN-Eurasia, another $200 million in TGN-Intra Asia and over $50 million in Seacom undersea cables.

The remaining $500 million would be invested for WiMax operations, which were launched in Bangalore. The company is planning to launch the services in other cities, starting with Chennai, Delhi and Hyderabad.

Another $1 billion would be invested in multi-protocol label switching (MPLS) and ethernet network rollouts across the world. This will ensure a scalable and secure network, through which the company will provide advanced services.

N Srinath, managing director and chief executive, Tata Communication, said: "We are pleased to announce the new name, which builds on the track record of the Tata group. The integration will enable the company to be present globally under a single brand." 

Addepalli said the name of its subsidiaries was also being changed to reflect this - VSNL America will be renamed Tata Communications America and VSNL Sri Lanka will also see a similar change. However, VSNL Singapore would be named as VSNL International as it is the holding company of the group's global operations.

Tata Communications expects to post compounded annual organic sales growth of 15 per cent for the next four years, Srinath said.

The company was also targeting a margin of at least 20 per cent on earnings before interest, tax, depreciation and amortisation on a consolidated basis for the next four years.

Tata Communications shares gained 4.64 per cent to close at Rs 468.70 on the Bombay Stock Exchange.

Mega Makeover

Tata Communications integrates VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit and Cipris brands under its fold

The firm will invest around $45 million (Rs 175 crore) in a submarine cable system between India and France

About $1 billion (Rs 4,000 crore) would be invested in MPLS and ethernet network rollouts across the world

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BS Reporter in Mumbai
Source: source
 

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