VSNL seeks portal to exploit 'Net

Business Asia, March 3, 2000

Videsh Sanchar Nigam Ltd (VSNL), India's largest Internet service provider, plans to tie-up with a portal company as early as this month to focus on e-commerce.

VSNL is talking to seven or eight companies which run Internet portals, or one-stop shops for World Wide Web users, said VSNL operations director Amitabh Kumar.

"This is a very critical decision for us, because VSNL wants to boost revenue from Internet and other value-added services to about 12 billion rupees, or half its total revenue, within the next two years," said Kumar.

VSNL plans to set up on-line shopping malls and enable subscribers to trade shares. It is trying to reduce its dependence on revenue from international phone calls -- on which it has a monopoly in India until 2004.

Almost three-quarters of its revenue is currently from overseas calls.

With 351,750 Internet subscribers at the end of January, VSNL, which was the first to begin Internet services in the country, commands almost 70 per cent of the market.

The company aims to get 1 million subscribers by the end of March 2001.

"Being the biggest Internet infrastructure provider, everything goes through us," said Kumar. "That is the position we would like to maintain."

The company plans to hive off its Internet division into a separate company known as VSNL Seamless Ltd and expects to rake in 1 billion rupees from e-commerce services by 2003.

According to market researcher International Data Corp (IDC), the number of Internet users in Asia outside of Japan will expand 35 per cent a year until 2003 to reach 57.5 million customers, with China and India leading the growth.

To serve all the new users, VSNL will next month expand its Internet line to handle 315 megabits of data a second from the current capacity of 165 megabits. That may be expanded by another 155 megabits in a couple of months, Kumar said.

Still, VSNL's plans to expand its Internet business depend on obtaining a licence from the Indian government. It only has a license to operate in six cities, unlike rival Satyam Infoway, which can operate all over the country.

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