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Tuesday, Jun 11, 2002

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DoT, VSNL patch up -- Panel to decide on Tata Tele investment

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NEW DELHI, June 10

THE 13-day-long spat between the Communications Minister, Mr. Pramod Mahajan, and Videsh Sanchar Nigam Ltd. (VSNL) has finally ended, with a compromise reached between both the sides on reviewing the decision to invest Rs 1,200 crore in Tata Teleservices Ltd (TTL).

In a joint statement, the Department of Telecommunications (DoT) and VSNL have announced that an agreement to this effect has been reached and that they are committed to "working in a spirit of mutual understanding and accommodation with a view to securing VSNL's future''.

As per the agreement, the Government nominee Director, Mr. Y.S. Bhave, Joint Secretary, Department of Information Technology, will form part of the three-member committee set up to review the decision. The committee has been mandated to study and decide the quantum and valuation/price at which the investment will be made in TTL at various points of time. It will also decide the tranches and periodicity of investment in the Tata group company.

The committee has further been entrusted with the task of negotiating, finalising and executing shareholder agreements and other contractual arrangements with TTL to best protect the interests of VSNL in respect of the investment. Both the groups also decided that the committee would determine the conditions of draw down of the investment to TTL linked to defined milestones to be achieved by TTL.

In a letter to the VSNL Managing Director, Mr. S.K. Gupta, listing the scope and terms of reference of the reference of the committee, Dr. D.P.S. Seth, Member (Services), Telecom Commission, has noted that it would also "play a constructive role in the manner in which TTL utilises and applies the investment. The committee would identify and quantify any additional investment opportunities which are more attractive and submit the same to the board for its consideration'', he said.

More importantly, any other investment decision that the board may want to take up, will be reviewed by the committee. It would have to periodically identify and quantify additional investments that would strengthen VSNL. The committee is expected to complete its deliberations on the investment decision by August 15.

Mr. Gupta, in his reply to Dr. Seth, while agreeing with the revised terms of the committee noted that a resolution to this effect would be circulated among the board members as per suggestion.

According to informed sources, both the sides reached the agreement after prolonged discussion's lasting over three sessions on Sunday. With the Tata group not willing to prolong the controversy, and Mr. Mahajan adamant that there should be transparency in the decision-making process, a compromise formula was the only way out.

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