VSNL sells 10% equity in its Sri Lanka subsidiary

Videsh Sanchar Nigam Ltd (VSNL) has announced that it has sold 1,517,936 shares representing 10 per cent of the paid up capital in its wholly-owned subsidiary VSNL Lanka Ltd.

The shares have been acquired by Sri Lankan conglomerate Sunshine Holdings PLC, for approximately Rs(Sri Lankan)75 million.

Acording to the agreement, Sunshine Holdings PLC has the option to acquire an additional 5 per cent of VSNL Lanka's share capital in the next 12 months at fair market value.

Sunshine Holdings PLC has interests in pharmaceuticals, travel and tourism, tea and rubber cultivation and managing portfolio investments. Sunshine Holdings PLC has actively supported VSNL Lanka in its growth plans over the last few years; Vish Govindasamy, managing director, Sunshine Group, has been a director on the board of VSNL Lanka since its inception.

"This partnership with Sunshine Holdings PLC will enable VSNL Lanka to capitalise on our partner's intimate knowledge of and experience in the Sri Lankan market. This is also part of our attempt to unlock value for our shareholders in an appropriate manner," said Rajiv Dhar, CFO, VSNL.

Govindasamy added, "We have been working closely with VSNL in Lanka and this investment reiterates our commitment to this partnership. We firmly believe that VSNL Lanka will be able to achieve a strong position in the Sri Lanka telecom market."

VSNL Lanka has been offering international voice and data services in Sri Lanka through an external gateway operator's licence since February 2004. VSNL Lanka will continue to play a leading role in the fast growing Sri Lankan market for international voice and data services. VSNL Lanka had recorded cash profits in the first six months of its operations and net profits in the first year itself.