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A little over four years ago, Videsh Sanchar Nigam Limited (VSNL) made money every time someone placed a call into or out of India. After all, it was the sole provider of international traffic.
But when the government sold VSNL to the Tatas for Rs.2,539 crore in 2002, it also took away the monopoly. The Tatas had expected the monopoly to last for at least two more years till April 2004, but that never happened. In a stroke VSNL's years' older successful business model, which had almost entirely stringed on its monopoly status, was under threat. VSNL's revenues told the full story. Between 2002 and 2003, revenues dropped 38 per cent - from Rs. 7,809 crore to Rs. 4,813 crore.

That is when the company decided to change its business model following the path of other global telecom giants. Along with that started the journey of global mergers and acquisitions leading to the formation of TIEBU (The Tata Indicom Enterprise Business Unit or TIEBU) to halt fall in revenues, with the rationale to offer single point interface through which the companies can deliver telecom services to key corporate customers around the globe.

VSNL has undergone a critical transformation over the past two years to globalize its innovative service offering. Fuelled by the financial stability and long-term strategic vision of the Group, the company launched operations in the United States, Europe, and Asia to establish the local knowledge and presence to support a burgeoning global client base through VSNL International the international arm of the Company operating in Key global business hubs and offering a comprehensive suite of communications solutions for enterprises and carrier.

To make it a global telecom giant that already has the pan India presence VSNL put its first step forward with the acquisition of global telecom players - To and Tyco Teleglobe - at the cost of $396 million which were obviously the cheap deals. These deals provided VSNL the access to submarine cables and huge bandwidth and that were the keys for international wholesale telecom business.

This huge capacity and bandwidth was comparable to some of the largest international telecom players and brought VSNL in direct confrontation with global telecom heavy weights like AT&T and Verizon. Unfortunately this was not all.

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* Contributed by: -
Ashutosh Garg,
(Final year MBA Student)
ICFAI Business School, Kolkata