VSNL buys out Tyco unit for $130 mn

The VSNL acquisition follows a string of takeovers by Indian companies abroad. Tata Steel bought a Singapore steel firm for Rs 1,313 crore, Tata Motors took over Daewoo’s Korean truck unit for Rs 465 crore and Ranbaxy took over RPG (Aventis) for Rs 300 crore.

The agreement with Tyco is part of the company’s strategy to offer its enterprise and carrier customers seamless, end-to-end telecommunications solutions, VSNL said.

‘‘The agreement is a major step forward in our drive to offer enterprise and carrier customers seamless, end-to-end telecom solutions that circle the globe,’’ said V. Sainath, Director of VSNL.

‘‘This agreement coupled with submarine cable we plan to launch shortly connecting India with Singapore will give customers a new choice in global data services. Furthermore, the timing of this transaction is well suited to our expansion plans,’’ he added.

The agreement with Tyco follows a notice from the Federal Communications Commission, which permitted VSNL America Inc to provide international telecommunications services from US. VSNL America is the US subsidiary of the Tata group company.

Reliance and a US-based firm were also contenders for the Tyco network. For VSNL, acquisition of Tyco makes strategic sense as it will be able to offer better quality services to its Indian customers. Reliance had already bought flag telecom for $108 million which gave it access to a global network of fibre optics.

‘‘This agreement will allow us to provide our enterprise and carrier clients worldwide customized and robust connectivity solutions under one trusted global brand,’’ said Vinod Kumar, executive director of VSNL’s international group.

Tyco Global Network (TGN), the undersea fibre optic telecommunications network of Tyco, had an annual pre-tax operating loss of $117 million.

VSNL, a former government company, is expanding its global presence and had recently set up operations in the US, Singapore, Europe, and Sri Lanka.

Its existing international connectivity capabilities, both undersea as well as satellite, offer the greatest diversity in India which is critical for all customer segments.

The company is also growing its retail and corporate presence under the Tata Indicom brand through its products like high speed broadband, dial-up internet, net telephony, and calling cards. The company has a subscriber base of 750,000. VSNL, which is listed on the NYSE, is increasing its focus on the retail broadband business.