Rediff On The Net, Infotech: VSNL, MTNL to not hold each other's shares


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January 11, 1999

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VSNL, MTNL to not hold each other's shares

The government has ruled out cross-holding of shares between Videsh Sanchar Nigam Limited, the monopoly international telecom service provider, and Mahanagar Telephone Nigam Limited, the basic services operator in Bombay and New Delhi.

MTNL Chairman and MD S Rajagopalan has said "The government has decided against cross-holding of shares between the two companies as it does not solve any purpose. Since the two companies are in same business, equity swap will not help either of them."

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According to Rajagopalan, it will send wrong signals to the investors. "I am not sure whether it will be good for the health of the company," he said.

However, he said MTNL is "actively considering" proposals to buy back its shares in the larger interest of investors.

He was speaking on the occasion of the signing of the memorandum of understanding with VSNL. The deal is to jointly explore business opportunities abroad and in the country.

The two government-owned telecom operators would pool their resources and expertise and compete for new opportunities in the country that may come up because of the liberalisation of the telecom policy.

One of the sectors that the MoU will explore is domestic long distance service sector. This is likely to be liberalised soon.

The joint venture will also compete in the emerging markets such as Africa, South Asia and Middle East. "Africa is now opening up and it will provide good opportunity for the two companies. Kenya and Mauritius are two such countries which have recently liberalised," said Vinoo Goyal, director (development) VSNL.

Goyal also said that the ongoing businesses of the two companies would not suffer because of any joint venture.

VSNL is going for a GDR issue of about 11 million shares. The GDR is expected in the current financial year. During its GDR in the last financial year, VSNL had committed to form a joint venture with a multinational for its regional hub project that envisaged routing traffic from neighbouring countries to India.

However, the company has not yet finalised its partner for this project, said Amitabh Kumar, acting chairman and MD of VSNL.

- Compiled from the Indian media

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