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Govt mulls phased divestment of VSNL pie

India is drafting plans for a phased sale of its stake in state-run monopoly overseas telephony provider Videsh Sanchar Nigam Ltd before April next year, a senior government official said on Thursday.

"Government is considering that we first go to the market to offload a small portion of our stake. We will then do a strategic sale," the official, who did not wish to be quoted, told Reuters. "The objective is very clear. We want to bring down government stake in the company to 26 per cent."

The government owns a 53 per cent stake in the firm, which is also the country's largest Internet service provider.

The official said that the government was not averse to reducing the stake below 26 per cent in the future. But the immediate aim was to lower the stake to 26 per cent before April 2002.

Last year, the government announced plans to end VSNL's monopoly on international calls and throw the business open to private operators. Also, it would pay the New York Stock Exchange-listed firm Rs 7 billion as compensation for ending the monopoly.

The government's plans to reduce its stake to 26 per cent before April 2002 is aimed at getting a better price for its holding in the firm, the official said.

The issue of privatisation of VSNL is widely expected to be discussed at the January 30 meeting of the federal cabinet committee of disinvestment, which decides on privatisation of state-owned firms.

VSNL, along with another state-run firm Mahanagar Telephone Nigam Ltd (MTNL), are on top of the government's list of firms that it wants to privatise. VSNL's shares ended at Rs 325.7 on Wednesday.

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