ICO Global write-off dents VSNL bottom line

MUMBAI, APR 29: While most corporates, especially ICE companies, have been posting good results, profits of Videsh Sanchar Nigam Ltd (VSNL...

MUMBAI, APR 29: While most corporates, especially ICE companies, have been posting good results, profits of Videsh Sanchar Nigam Ltd (VSNL) have dropped sharply for the year ended March 31, 2000. The international telecom provider has posted a steep 39.68 per cent fall in its net profit to Rs 799.2 crore from Rs 1,325 crore, on a total income of Rs 7272.2 crore.

The drop was largely due to a write down of investment in ICO Global Communications to the tune of Rs 512.7 crore for the year. The company had invested US $ 150 million in ICO

before the investment was written down to 1 per cent following ICO’s Chapter 11 filing for bankruptcy in the United States.

Other income contributed Rs 248.1 crore to the total income. Net sales were up marginally to Rs 7024.1 crore from Rs 6768.3 in 1998-99. "Both traffic volume and internet subscriber base achieved a growth of 16 per cent and 72 per cent respectively. However, due to lowering of Total Accounting Rate (TAR) by 10-14 per cent during the year and lowering of internet tariffs, income from operations has not increased proportionately," the company said in a statement.

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Profit before tax (excluding other income) for the fiscal was higher at Rs 1700.7 crore (Rs 1569.9 crore) despite lower realisation in the fourth quarter. Profit before tax for the quarter ended March 31, 2000, was lower at Rs 431.3 crore (Rs 438.1 crore).

Net profit during the fourth quarter was down to Rs 311.9 crore (Rs 336.9 crore) on a total income of Rs 2021.5 crore (Rs 1,849.2 crore). The traffic during the last quarter was 614.96 million minutes (519.56 million minutes), a growth of 18.36 per cent. Earnings per share stood at Rs 32.83 and for the fiscal at Rs 84.13 (Rs 139.47).

"Revenue from value-added services continued to surge at Rs 603 crore, comprising 8.67 per cent of the traffic revenue compared to Rs 492 crore in the previous year. The company’s internet user-base has grown by 72 per cent and the revenue from the segment has gone up by 17 per cent," VSNL chairman and managing director SK Gupta said.

VSNL has made a provision of Rs 135 crore to set up additional gateways at Kanpur, Bangalore and Hyderabad. In order to enhance the ISP infrastructure, VSNL has decided to slash the international private leased line charges by 50 per cent to all ISPs.

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The number of internet subscribers stood at 3,36,000 as on March 2000, while the number of leased lines for internet has increased to 600. VSNL also commissioned of 45 mbps (mega bytes per second) of internet capacity on the Fibre Optic Link Around the Globe (FLAG) cable system. This capacity has been commissioned with Teleglobe terminating in United States.

Commenting on the Mumbai-Pune-Arvi Microwave SDH system, Gupta said the company was committed to commissioning STM-16 OFC ring by August 2000. VSNL’s Standard `B’ earth station facility to becommissioned in Hyderabad by mid-2001 would enable this region to have better international telecommunications facilities. The company has also signed a memorandum of understanding with Haryana State Electronics Development Corporation Ltd to set up a high speed data communications facility with associated marketing data link, internet access and other value added service of the former, it dded.