Ratan N Tata, non executive chairman of Tata Sons and chairman of Videsh Sanchar Nigam has set a 18-24 months timeframe for merger of all telecommunication businesses of the group.
"We will merge all telecommunication activities into one in 18-24 months. So, bear with us till then", said Tata while addressing VSNL shareholders at an extraordinary general meeting here on Friday.
He told the shareholders that VSNL is looking at having presence in other countries as well. "Perhaps we will have a gateway in these countries," he said. VSNL has already bought the US-based Gemplus and "Dishnet to have a presence in the retail market".
The Tatas have revalued the VSNL assets and brought it down from Rs 1,862 crore (Rs 18.62 billion) to Rs 956 crore (Rs 9.56 billion).
VSNL management has written down Rs 810 crore (Rs 8.10 billion) on changing costs and Rs 146 crore (Rs 1.46 billion) or the life of the equipment.
This will help VSNL save Rs 236 crore (Rs 2.36 billion) over a period of five years.
Tata said, "The new accounting standards reflect the age of assets. This is not an issue of revaluating assets down but an issue of competitive situation which was not their two years ago. In a manner of situation it is a drop dead situation. But revaluation will keep u alive a little longer".
He pointed out that "VSNL has not turned the corner but was going through a transition."
Tata said he was confident of a future on long-term basis for VSNL but for the short-term "it is going to be difficult road, we have taken steps to realign business. The third quarter results were out as we sold shares in a satellite company. Those kinds of steps will be taken to tide over short term issues."
He emphasised that the main business of international long distance has to be substituted by other businesses related to telecommunications.
On the surplus land and the legal issues vis-à-vis US shareholders, Tata expressed the need to resolve these issues before the government exits from VSNL.
On the golden share demanded by the government, Tata said, "it was equivalent to the right of holding 26 per cent stake in VSNL". Having disinvested the company in favour of the Tatas, "it is unfair and unjust by the government and we are having that reviewed," Tata said.
