Officiating chairman and managing director Amitabh Kumar said, "VSNL's investments in technologies of the future have positioned the company to take advantage of new opportunities that arise and continue with a strong performance in the current year. In addition, the company would provide continuous improvements in value added services."

VSNL has signed a memorandum of understanding (MoU) for `Project Oxygen' which will be the world's first optical fibre system with a capacity of 300 Gbps, operating on ATM technologies. Moreover, it has signed an MoU for joining the South Africa-Far East (SAFE) cable project with a proposed investment of $50 million.

Recently, the company revamped the Internet access network in Mumbai by providing direct connectivity from allmajor exchanges in the city through a single call hunting number. VSNL is in the process of building a countrywide ATM network for efficiently linking its gateways to international ATM super-highways and to provide multimedia services. During the second quarter, the company signed an MoU with the DoT outlining performance targets for VSNL, commitments for DoT and grant of specific freedoms as a Navratna company.

INSIGHT

Good growth rate sustainable

International long distance telephony continues to remain VSNL's cash cow with it contributing around 92 per cent to the total operating revenue while specialised services have contributed 6 per cent. However, operating margins have reduced to 14.2 per cent from 18.1 per cent owing to VSNL slashing its Internet access rates.

On March 31, 1998 VSNL Seamless Services was incorporated to market its value-added high margin service like Internet, e-mail, electronic data interchange and video-conferencing. The company is targeting an Internet userbase of 1.80 lakh by March, 1999. In the future, VSNL should be able to sustain a good growth rate owing to the following reasons. First, low telephone penetration in the country is set to expand owing to privatisation. Second, it is geographically well located to emerge as a regional hub for South Asia. Third, GMPCS, Direct-to- Home ( DTH ) and Internet services would entail higher margins.