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Tuesday, Oct 22, 2002

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VSNL: Competition prunes net by 33 pc

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MUMBAI, Oct. 21

DECLINING customer tariffs, lower settlement rates from international carriers, and the impact from competition in the international long-distance telephony business have led to VSNL reporting a drop in both net profit and income for the second quarter of the current fiscal.

A 16-per cent increase in telephony traffic volumes could not neutralise the combined impact of these negative factors.

Net profit dipped 33.2 per cent to Rs 245.9 crore for the quarter ended September 30, 2002, as compared to the net profit of Rs 368.5 crore reported in the second quarter of the previous year.

The decrease in profitability was due to lower margins and lower other income, said a statement from the company.

Operating income dipped 21.78 per cent to Rs 1,247.8 crore (Rs 1,595.4 crore), dragged down by a 25 per cent fall in

telephony revenues as well as a substantial drop in other income, at Rs 56.3 crore (Rs 148.8 crore). VSNL said the decline in other income was attributable to the reduced foreign exchange earnings and lower interest income.

In fact, there was a danger of the income being even lower for the quarter under consideration, on account of the interconnect payment being calculated based on the same ratio as that for the year ended March 2002. Pending final interconnect agreements with BSNL and MTNL, still a sore and unresolved problem, the earlier ratios have been maintained.

The company said that reference had been made to Telecom Regulatory Authority of India for fair settlement of the issue, and that on conclusion of these agreements the figures would be adjusted accordingly.

"The next quarter will see significant investment in infrastructure, in the areas of both voice and data as we seek to consolidate our strengths and take our business to greater heights with an increased customer-friendly focus,'' said Mr S.K. Gupta.

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