BPL pulls out of VSNL bidding consortium

Santosh Menon

NEW DELHI: Telecoms group BPL Communications has pulled out of the bidding

consortium eyeing a controlling stake in state-run telecoms giant VSNL being

privatized by the government.

But it said in a statement on Wednesday it still was "keenly

interested" in India's monopoly overseas telecommunications carrier and

"would evaluate other options and alternatives for participating in this

bidding process".

The privatization of Videsh Sanchar Nigam Ltd -- billed as India's most

ambitious yet in a decade of economic reforms -- is in its final stages with the

government expected to invite price bids from prospective suitors in December.

Unlisted BPL Communications had teamed up with another Indian company

Sterling Ltd. and two US firms, Century Tel and TyCom Ltd, to bid for VSNL, the

country's largest Internet access provider. But the Bangalore-based group with

large interests in the Indian mobile phone business, said it had reviewed its

bidding strategy and decided to withdraw from the consortium.

Other members of the consortium said they were going ahead with their bid.

"We continue to be interested. The remaining members of the consortium are

going ahead with the bid," consortium spokesman V. Srinivasan told Reuters.

BPL, Tata tie-up?



Sources in BPL said they were keen to explore a tie-up with the Tata group,
India's second-largest private business conglomerate, which is one of the

bidders for VSNL.

In June, BPL Communications said it was merging its mobile phone business

with that of another mobile company Birla-AT&T-Tata, in a $2 billion deal to

create India's largest mobile phone company. Birla-AT&T-Tata is an equal

venture between US telecoms giant AT&T and the Birla and Tata groups.

"The VSNL bid was put in before the merger announcement. It's only

natural that they'll now look to ally with the Tatas," said an analyst with

a foreign brokerage, who asked not to be named.

The government plans to cut its stake in the New York Stock Exchange-listed

VSNL to 26 per cent from 52.97 per cent now by selling a 25 per cent stake to a

strategic partner and another 1.97 per cent to VSNL's employees. Three bidders

were in the fray to win control of VSNL, including India's largest business

conglomerate, the Reliance group, the Tatas and the BPL-Sterling-Tycom-Century

Tel consortium.

The sell-off has already seen the exit of three bidders -- the Birla group,

consumer electronics group Videocon and a consortium comprising Bharti

Enterprises and Singapore Telecom.

VSNL's shares were little changed at Rs 229.75 in Wednesday afternoon trading

on the Bombay exchange whose 30-share benchmark index was up 0.30 per cent.

(C) Reuters Limited.