VSNL profits fall

MUMBAI, OCT 22: Videsh Sanchar Nigam Limited VSNL, which recently floated a public issue, has suffered a marginal drop in net profit fo...

MUMBAI, OCT 22: Videsh Sanchar Nigam Limited VSNL, which recently floated a public issue, has suffered a marginal drop in net profit for the first time to Rs 701.7 crore for the half year ended September 1999 from Rs 736 crore in the corresponding period of the previous year.

Profits took a beating in the second quarter of 1999-2000 due to reduced tariffs, coming down to Rs 346.6 crore as compared to Rs 424.7 crore recorded in the same quarter of 1998-99. Total income during the quarter was Rs 1785.5 crore down from Rs 1901.7 crore. 8220;VSNL profits fell when it has a monopoly in the overseas telecommunication sector. What will be the situation when this segment opens up after three years,8221; said an analyst.

Addressing an analysts meet after the results were taken on board VSNL CMD S K Gupta said the reduced income could be attributed to lower other income during the quarter which dropped to Rs 122.3 crore from Rs 220.5 crore in the comparable quarter of 1998. quot;The lower growth in revenues is commensurate with the fall in accounting rates of 10 per cent in the corresponding period and a growth in traffic of 19.53 per cent,quot; Gupta added. Gross profit excluding other income was Rs 440.1 crore Rs 439.8 crore.

Beating the negative trend, revenue from value-added services jumped to Rs 141.4 crore Rs 133.5 crore. Internet revenue was up 47.99 per cent to Rs 44.1 crore despite the over 30 per cent drop in tariffs. Frame relay services revenue was also up 166.67 per cent to Rs 88 crore, while other value-added services contributed Rs 88.5 crore Rs 100.5 crore. In all value-added services accounted for 25.66 per cent of the net telephone revenue. Telephone traffic was 556.80 million minutes 465.82 million minutes.

The company has invested Rs 44 crore in setting up gateway exchanges at Kanpur, Bangalore and Hyderabad. It is also considering an investment of 10 million in Project Oxygen, a global optical fibre submarine network. In current fiscal, it also plans to convert its GDRs to ADRs and transfer its internet services to VSNL Seamless Services, a 100 per cent owned subsidiary.

On VSNL8217;s proposed investment in the Subash Chandra promoted Agrani project, Gupta said it was still being studied in view of the current developments in GMPCS sector. Its equity stake in ICO Global Communications is likely to come down to 2 per cent under a recently proposed restructuring plan by ICO to prospective investors. However, pending approval of the plan, VSNL has not considered any provision for reduction in value of investment.