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WorldCom scam may dent VSNL coffers by over Rs 4 billion

BS Corporate Bureau

The accounting scandal at WorldCom, the second largest US long-distance telecommunications group, is expected to make a dent in the accounts of Videsh Sanchar Nigam, the local ILD (international long distance) provider. VSNL is expected to lose close to $87 million (over Rs 4.26 billion) which it gets as receivables for to-and-fro international telephony traffic.

VSNL managing director S K Gupta said, "We are studying the situation. We have relationships with 85 international carriers and WorldCom is just one of them. We are collating information as to how much traffic WorldCom carries from VSNL."

When asked whether WorldCom owes money to VSNL, Gupta did not deny its possibility. "The settlement is done periodically so that there could be some outstandings.

We are looking at how much outstanding amount is to be settled between the two sides.

A clear picture will emerge in the next two to three days," he said.

Rowena Kwok, WorldCom's spokesperson based in Hong Kong, could not be reached for comments.

A public relations executive said on behalf of VSNL: "We are in talks with WorldCom and are trying to ascertain the facts of the matter. We will be able to comment on the matter once we have more clarity."

VSNL has relationships with over 85 carriers in 75 countries and 87 per cent of its operational revenue comes from ILD services.

It has also billing and collection processes with several international carriers.

A Mumbai-based analyst said, "VSNL will probably have to write off the receivables if WorldCom is wound up. In all probability the receivable is expected to be in the region of Rs 3-4 billion."

Having invested over Rs 25 billion in operations, VSNL till recently enjoyed a monopoly in international long distance. However, with major basic telecom players in India like Bharat Sanchar Nigam, Mahanagar Telecom Nigam, Bharti and Reliance having received licences for ILD, the monopoly has come to an end.

During the year ended March 31, 2001, VSNL's sundry debtors were to the tune of Rs 18.11 billion as against Rs 25.43 billion in the previous year.

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