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Tuesday, Aug 13, 2002

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VSNL: Making it ring the Tata tone

G. Rambabu

NEW DELHI, Aug. 12

IS Videsh Sanchar Nigam Ltd (VSNL) an international long-distance service provider or Internet service provider?

It may sound strange, but the country's leading ILD operator, having a near monopoly over the market, is facing an identity crisis. According to a recent survey undertaken by the company, close to 60 per cent of its corporate and household customers still relate to it as an ISP. What is more, with regard to "top-of-mind awareness", only 28 per cent of the corporates and 20 per cent of the households could recall the VSNL brand name.

This startling fact, disclosed at a recent investors/analysts meet, has forced the company to embark on "brand visibility" programmes, which includes, among others, aggressive advertising, creating sales and marketing force, appointment of channel partners, distributors and dealers.

With other private competitors nibbling away at its market share, VSNL, now under the Tata fold, has already identified large corporate accounts countrywide and appointed accounts managers to retain them.

Contact coverage of important customers has also been completed and their feedback is being incorporated to improve the functioning.

It was also announced at the meeting that VSNL has appointed 35 channel partners in eight cities for the rest of the corporates and small and medium enterprises.

Meanwhile, distributors and dealers are being identified in metros, which will be extended to the other cities over time. The brand work has also been initiated to leverage on the other Tata telecom brands, which corresponds to the advertisement campaign started to counter the low awareness among clients. On the operational front, VSNL once again has expressed its intention to be aggressive on settlement rates, reduce call charges, aim for traffic growth, extend network into major markets and establish points of presence and develop strong country direct, card calling and callback services. Marketing and service innovations, voice over Internet as a new Internet revenue source and introduction of Internet telephony to complement its offerings were also high on its agenda, the investors/analyst meeting was informed.

However, one aspect crucial to the future viability of its operations is a direct presence in the basic services sector, without which the company would not be able to capitalise on its existing market presence. The company informed the meeting that its decision to acquire 25 per cent stake in Tata TeleServices Ltd (TTSL) was in keeping with the trend being practised internationally by other ILD operators i.e., strategically align with viable basic service operators having last-mile access to customers.

According to analysts, the best way forward for VSNL is to have a significant equity stake (unlike say a token presence of five per cent) in a company like TTSL so that it reaches a position to positively influence TTSL's decisions in its favour.

Putting Rs 1,200 crore by VSNL for equity stake of close to 25 per cent assures this, analysts say. Any move to limit scope of business is only going to harm the bottomline of all parties involved in the telecom chain, the Government being the end-loser, they note.

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