What went in VSNL''s favour?

Mumbai:
22 November 2004

Mumbai: The acquisition of Bermuda-based submarine cable operator, Tyco Global Network (TGN), by Videsh Sanchar Nigam Ltd (VSNL) for $130 million, beating three international players, has been an excellent buy for the Tata group as it comes at a time when VSNL was planning of going global. Also in the running for Tyco was Reliance Infocomm Ltd.

However, the moot question is why Tyco choose VSNL, ignoring all other bidders, of which one is believed to be from Latin America and another from Hong Kong, apart from India's Reliance.

According to telecom analysts, money was not the criteria, but a plethora of other factors including synergies in operations.

Moreover, VSNL's cash-reserve of more than Rs700 crore also went in its favour. The cash reserve and the synergies in operations between Tyco and VSNL would ensure that the Tata-group company would not crash bandwidth prices across the globe.

Tyco International wanted to sell off its ailing submarine cable business and had appointed the investment bank Goldman Sachs to conduct the bidding. Even though, analysts say that the sub-sea link was a "disastrous sale", Tyco managed to ensure that the under-sea cable business was in safe hands.

Fortunately for Tyco, the bidders were companies with whom the company had partnered and choosing one among them was not a difficult task.