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VSNL, Teleglobe integrated under Tata Communications

In a bid to be able to leverage the Tata Group's global brand equity, the group's telephony services and brands have been integrated under one company, reports Saurabh Turakhia.
By Saurabh Turakhia | Hindustan Times, Mumbai
UPDATED ON FEB 13, 2008 10:26 PM IST

In a bid to be able to leverage the Tata Group's global brand equity, the group's telephony services and brands — VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit and Cipris — were all integrated under one company, Tata Communications.

Srinivasa Addepalli, senior vice president-corporate strategy, Tata Communications, said, "As per the arrangement, we will have to shell out 5 per cent of our profit before tax or 0.25 per cent of its revenues, whichever is lower, per annum as royalty towards usage of the Tata brand name."

Addepalli added Tata Communications would invest $2 billion to pursue its expansion plans in the next three years. Of this, $500 million each would be spent for completing additional submarine cable systems and the WiMax business respectively, he said.

The company will spend $4-5 million in the next three months through direct marketing initiatives to communicate the integration of its businesses to the market. With the launch of Tata Communications, there is a possibility of change in the names of the broadband businesses (Tata Indicom broadband), VGSL (VSNL Global Services Limited) and VSNL's other ventures and subsidiaries. Tata Communications is seriously looking at opportunities in the business of managing telecom outsourcing services for service players in markets like Europe, Middle East and Africa. Addepalli said that the company currently manages such services for four clients.

“We already have 600 people under a 100 per cent subsidiary of the former VSNL — known as VGSL — at our centres in Pune and Chennai. We are going to add 2,000 more engineers this year for this business,” said Addepalli, indicating the significance of the business in the wake of global carriers eyeing outsourcing to attain cost efficiencies.

The current break-up of revenues for Tata Communications includes 65-70 per cent in voice revenues, 28-30 per cent (data business), and the remainder from other offerings.

The company's WiMax services are being offered in Bangalore currently and the company plans to cover Hyderabad, Chennai and Delhi in the next three months.

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