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Exhibit 7

The Acquisitions

At first VSNL tried to built its global operations organically. It obtained license in the US and the UK and sets up point of presence there. It even created an organization, headquartered in Singapore to take care of its operations in US, UK, Hong Kong and Singapore.
But the real break came when it acquired Tyco Global network with its 60,000 km of submarine cable across the globe for $130 million dollars. TGN's network had been built during the internet boom at the cost of nearly $2.5 billion.

Then VSNL acquired Teleglobe in July 2005 for $235 million. Teleglobe was once again acquired cheap. It was the leading wholesale voice provider with over 13 billion minutes of traffic annually. What VSNL was to India voice in the international long distance (ILD) context, Teleglobe was to several countries across the US and Europe.

Though acquired at through prices, both were loss-making outfits. For Teleglobe alone, VSNL assumed a debt of $ 61 million as a part of the acquisition cost. For VSNL, what TGN bought to the table was a robust global cable network. Earlier, VSNL's international network was mostly through partnering in cable consortiums (it owned around 3000 km of cable). It was procuring and reselling bandwidth capacity every year at fairly high rates. Now, it owned a lot of cable it paid for in precisely the markets it was targeting. Infact TGN's network was a complementary fit to VSNL's own network. TGN had strong networks connecting North America, Europe and Asia, but not India-centric cables.

Teleglobe, on the other hand, brought the traffic. It had over 13 billion minutes of traffic annually, more than three times of VSNL. With VSNL's own traffic of 4 billion minutes, it was now among the top 3 global players. In 2005, VSNL's revenue was $750 million, while Teleglobe's was $1.1 billion. This contributes significantly to VSNL's global business.

Concluded.

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