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April 12, 2001
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Money > Business Headlines > Report April 12, 2001 |
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Dhoot-Richard Li to bid for VSNLReeba Zachariah Consumer durables major Videocon, as part of its massive diversification plan, has tied up with Richard Li's Pacific Century Cyberworks for its proposed bid for Videsh Sanchar Nigam. The two partners have put in an expression of interest for 25 per cent stake in VSNL on Monday. Venugopal Dhoot, chairman of the Videocon group, said from London: "We have put in a bid for acquiring the government's stake in VSNL on Monday." He confirmed that Videocon has tied up with a Hong Kong-based multinational, but declined to disclose names. "Non-disclosure clauses in our agreement do not allow me to reveal any details of the tie-up," Dhoot said. However, sources close to the Dhoots confirmed that the partner was PCCW. They added that Li's company would hold 11 per cent, if they turned out to be the successful bidder, while the Dhoots would hold the balance. Dhoot said, "This is a logical move as it is in line with the company's new focus of Internet Service Providers and interactive television businesses. This is another step in the company's endeavour to become a leading convergence company. To fund the bid, Dhoot said, "The company will raise funds out of internal accruals." The group has put in its bid through Videocon Communication. In Videocon Communication, both Mitsubishi Corporation and Toshiba has 25 per cent stake. As part of its diversification plan, Videocon is getting into the ISP business and has also made a bid for Indian Airlines, the domestic carrier. The Rs 40 billion Videocon group's bid for VSNL came as a surprise to industry analysts as it was the last to join the bandwagon. Videocon, despite the onslaught from consumer electronics transnationals, remains the second largest player in the sector. Others in the fray for the VSNL pie are the Tatas, Reliance, Bharti-Singtel, and the Chennai-based Sterling group. Sources said foreign operators are not much interested in acquiring stake in VSNL. One of the reasons for this is that the FDI norms do not permit more than 49 per cent foreign equity in the company. Presently, the foreign equity in the company is about 31 per cent. Therefore, the prospective strategic partners will have to form joint ventures with domestic companies. Besides, international voice tariffs are getting cheaper over time and over the long-term are expected to become almost free. Powered by ALSO READ:
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