The Hindu : VSNL takes over Dishnet's ISP division

Online edition of India's National Newspaper
Saturday, Mar 20, 2004

Business

Business

VSNL takes over Dishnet's ISP division

By Our Special Correspondent

CHENNAI, MARCH 19. Internet service provider Videsh Sanchar Nigam Limited (VSNL) today inked a `slump sale agreement' with the Chennai-based Dishnet DSL Ltd. of the Sterling group to acquire the narrow and broadband businesses of the latter's ISP division.

The deal involves a consideration of Rs. 270 crores. Sources indicated that it was a cash deal. VSNL is confident of funding this acquisition through internal resources.

Under the agreement, VSNL will takeover all Internet assets, employees and customers belonging to the ISP division of Dishnet. The transaction is subject to the fulfilment of certain set terms and legal formalities.

According to V. Srinivasan, Chief Executive Officer and Director of Dishnet, it will take 3-4 weeks to complete the transaction. Quizzed as to why Dishnet had chosen to hive off narrow and broadbrand businesses, Mr. Srinivasan said, ``We have created a good company and added value as well. The promoters thought it good to sell.'' What will be left with Dishnet? Sources within clarified that the company would continue to exist and the brand would remain with the Sterling group. Dishnet would now focus on other activities like telecom consultancy services, project management and wireless communication even as it looked around for new business opportunities.

Dishnet was reportedly earning revenues of around Rs. 40-50 crores from other businesses (other than narrow and broadband ones).

Dishnet has staff strength of around 1150. Out of this, around 700 are currently attached to the narrow and broadband team of the ISP division.

All of them are expected to move over to VSNL once the formalities are completed. The deal will see VSNL takeover four network centres and around 38 points of service from Dishnet. The dial-up service of Dishnet has a customer base of around 1.5 lakhs. The DSL broadband service has a client base of about 30,000. The business from narrow and broadband services was worth around Rs.160 crores for Dishnet.

The Dishnet move to sell the narrow and broadband business comes close on the heels of the Sterling group taking over the RPG Cellular, a mobile service provider in the Chennai circle. It also comes in the wake of another sell-off by the Sterling group.

"The acquisition of Dishnet DSL's Internet business 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 N. Srinath, Director (Operations), VSNL, in a release. VSNL is also planning a significant entry into the broadband Internet space. It recently launched Tata Indicom Total Internet, an integrated solution comprising multiple Internet services.

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