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VSNL Floats Value Added Services Unit

In a bid to specialize operations the Videsh Sanchar Nigam Ltd. (VSNL) has floated a separate wholly owned subsidiary, VSNL Seamless Services Ltd. (VSSL), to handle value added services such as Internet-based video conferencing and international leased lines.

This is part of VSNL's strategy to broaden revenue base as its international traffic monopoly will come to an end in 2004.

The new company will concentrate on marketing value added services.

Through VSSL, VSNL hopes to compete with other value added service providers as the sector is opening up for private operators.

Officials pointed out that in order to meet the challenge from private operators, there was a need for a specialized company like VSSL.

VSNL has registered a high revenue growth of over 50 percent from value added service sector, although they still represent only a small per cent of VSNL's operating revenues.

During the last fiscal year, value added sector contributed about 1.25 percent of gross revenues.

The government ISP registered a revenue of $1.7 billion last year. This year, VSNL is expecting about four percent of gross revenues from value added services.

It has introduced ISDN, frame relay, and packet switching services from TMI, Cable and Wireless, British Telecom, Global One, World Partners and IBM.

VSNL had 87,000 Internet subscribers in March 1998. The subscriber base jumped to over 200,000 customers in March 1999.

While disclosing VSNL's medium term policy, the official said the company will invest in Global Personal Mobile Satellite services, direct to home TV and multimedia.

"We will do this through joint ventures where the joint venture partners can bring additional skills and value, the official added.

The company has plans to build a wholly owned, low cost, fully integrated, digital network across India. At present, the company relies on the Department of Telecommunications for some connections.

VSNL has chalked out plans for 10 international gateways, 24 satellite earth stations, five undersea cables, the regional hub and 55,000 circuits.

At present, VSNL is processing proposals for selecting joint-venture partners for its project to become provide regional hub for setting up sub-continental hub and terrestrial links in India for routing international traffic from neighboring countries.

"At the same time we plan to become market leaders in value added service sector," the official maintained.