Financial Daily from THE HINDU group of publications
Saturday, Mar 20, 2004
Mergers & Acquisitions
Info-Tech - ISPs
VSNL acquires Dishnet's Net biz for Rs 270 cr
Mumbai , March 19
VIDESH Sanchar Nigam Ltd has signed an agreement with DishnetDSL to acquire the Internet businesses of the Sterling Infotech group company for Rs 270 crore.
The acquisition would give VSNL access to the base of over 600 owned and franchised cybercafes of Dishnet. The latter's 20 dial-up locations are not among VSNL's existing 30 locations of operation, said a news release from VSNL. (Dishnet has customers in dial-up and broadband services in 38 cities and 200 towns.)
Importantly, the acquired broadband assets have the capacity to service more than 50,000 customers in key cities in the country. VSNL currently has 6.5 lakh dial-up ISP customers.
"The acquisition will strategically help VSNL consolidate its presence in the Internet space under the Tata Indicom banner by enlarging its geographical footprint and giving it a head start in the broadband Internet space," said Mr N Srinath, Director, Operations, VSNL.
VSNL described the transaction as a `slump sale' a spokesperson for the company said this is sale in which the acquirer company picks what it wants, (usually the assets and not the liabilities) of the selling company.
The agreement is for both the narrowband and broadband businesses of Dishnet DSL, said a news release from VSNL. The transaction includes all the Internet assets, employees and customers of Dishnet's ISP division.
The transaction is subject to fulfilment of certain conditions precedent and some legal formalities, which are expected to be completed soon before the transaction closes, said the release.
Our Chennai Bureau adds: When contacted, Mr V. Srinivasan, Chief Executive Officer, Dishnet, said after the sale to VSNL, the company would be left with the telecom services division. The division was involved in vendor negotiation, project management consultancy and wireless communication.
He said the company could look at other areas to grow. For instance, the company was executing a turnkey project for Tata Teleservices to put up base station towers for its cellular phone service. Dishnet could look at offering this service to other cellular companies, including the State-owned Bharat Sanchar Nigam Ltd.
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