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WorldCom India operations may not be hit

Syed Firdaus Ashraf in Mumbai

The Indian operations of WorldCom Inc are not likely to be affected, at least in the short term, as a fallout of the parent company filing for bankruptcy protection in the United States on July 21.

Responding to queries via e-mail, Hong Kong-based Rowena Kwok, Regional Public Relations, Manager, Asia-Pacific, WorldCom said, "We will be working at the same pace and there will be no affect of business for WorldCom in India."

Consumers and businesses may not see any service disruptions now, though experts fear that the quality of service may deteriorate over a period of time.

WorldCom, the world's largest carrier of Internet traffic and the No 2 US long-distance telephone carrier, filed for bankruptcy seeking protection from its creditors under Chapter 11 on Sunday, the largest insolvency in US history, with $107 billion in assets and $41 billion in debts listed.

Asked whether there will be retrenchment of staffers in India, Kwok said: "Chapter 11 in the US does not affect the Indian business which will continue to trade normally. All non-US subsidiaries are separate legal entities that are not a party to the Chapter 11 filing. Our non-US operations will continue to provide service to their customers."

WorldCom Inc has announced that it and substantially all of its active US subsidiaries filed voluntary petitions for reorganisation under Chapter 11 of the US bankruptcy code in the United States Bankruptcy Court for the Southern District of New York.

Chapter 11 allows a company to continue operating in the ordinary course of business and to maximise recovery for the company's stakeholders. The filings will enable the company to continue to conduct business as usual while it develops a reorganisation plan.

"WorldCom's non-US subsidiaries are not included in the filing and will also continue to operate normally," added Kowk.

"Chapter 11 enables us to create the greatest possible value for our creditors, preserve jobs for our employees, continue to deliver top quality service to our customers and maintain our role in America's national security," John Sidgmore, President and Chief Executive Officer, WorldCom said in a media release on Monday.

"We will use this time under reorganisation to regain our financial health and focus, while operating with the highest integrity. We will emerge from Chapter 11 as quickly as possible and with our competitive spirit intact," added Sidgmore.

WorldCom Inc is a pre-eminent global communications provider for the digital generation, operating in more than 65 countries. It currently employs more than 60,000 people worldwide. With one of the most expansive, wholly owned IP networks in the world, WorldCom provides innovative date and Internet services for business to communicate.

In India, WorldCom has three different offices in Bangalore, New Delhi and Mumbai.

Kwok, meanwhile, refused to divulge details about the number of employees employed by WorldCom in India and referred to her earlier statement that their business will not be affected. She also refused to give details about the revenue generated from the Indian operations for 'competitive reasons.'

Asked if the company's tie-up with the Videsh Sanchar Nigam Ltd would be affected due to the bankruptcy filing, especially in terms of payment of dues, Kwok said: "Everything is business as usual," without divulging any details.

There were fears that VSNL might end up losing up to $87 million (over Rs 4.26 billion) in dues from WorldCom, which it gets as receivables for to-and-fro international telephony traffic.

VSNL Managing Director S K Gupta had stated earlier that the company was studying the situation as to what was the traffic WorldCom carried from VSNL. Later, however, VSNL said that WorldCom had begun making payments to VSNL and that the matter 'could not be made too transparent as it could adversely affect WorldCom-VSNL ties.'

WorldCom took a major hit due to rising debt and a $3.85 billion accounting scandal, when it admitted that its expenses were improperly booked as long-term investments starting in 2001, violating accounting standards. The US Securities and Exchange Commission has charged the company with fraud.

The Clinton, Mississippi-based WorldCom has many lucrative business clients, including Nasdaq, AOL Time Warner Inc, BP Amoco, the Federal Aviation Administration, the US Defense Department, and some 20 million residential long-distance and 2 million local telephone subscribers.

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