VSNL aiming to buy Suntel

15 Jan 2007

India’s leading international telecoms provider Videsh Sanchar Nigam Ltd (VSNL) is in talks to buy Sri Lankan fixed line operator Suntel for an undisclosed sum, according to local newspaper the Economic Times. VSNL recently won international long-distance (ILD) and ISP licences in Sri Lanka, and is hoping to expand its existing inbound carrier business through acquisitions to become a full-service telecoms provider on the island.

Suntel had an estimated 250,000 wireless in the local loop (WiLL) subscribers at the end of 2006. Its portfolio includes basic telephony, pre-paid voice services, corporate data solutions, ISDN, dial-up internet access and xDSL lines. Suntel’s biggest shareholder is Nordic telco TeliaSonera, which holds a 55% stake via holding company Overseas Telecom AB. The remaining shares are split between Sri Lanka’s Metrocorp, the National Development Bank of Sri Lanka, Townsend Ltd of Hong Kong and the International Finance Corporation (IFC, a member of the World Bank Group). Suntel’s net profit for the six months to 30 June 2006 dipped by LKR93 million (USD850,000) year-on-year to LKR290 million (USD2.67 million), while revenues virtually doubled to LKR3.31 billion (USD30.5 million) from LKR1.96 billion a year earlier.

VSNL earns around three-quarters of its revenue abroad. The Tata Group subsidiary is a co-owner of Neotel, South Africa’s second national operator, and has acquired Teleglobe International Holdings Ltd and Tyco International’s global submarine fibre-optic cable network. On its Sri Lankan strategy, a VSNL executive said: ‘VSNL entered Sri Lanka in 2003 and views it as an important, growing market. The company’s ILD voice and data services have been well received and it plans to leverage its success in this market.’

Sri Lanka, Suntel (now part of Dialog), Tata Communications