On 5 February 2002, in a major disinvestment event, Tata Sons won the strategic control of VSNL when Panataone Finvest's (a Tata group company) bid price of Rs 1,439.25 crore at Rs 202 per share for buying 25 per cent of the government stake in VSNL was approved by the cabinet committee on disinvestment (CCD). The government had fixed a reserve price of Rs 1,218.375 crore for its 25 per cent stake in VSNL.

The Tata group is already very actively involved in the development of the Indian telecom sector. The group offers basic telephony services in Andhra Pradesh and has secured licences for Delhi, Gujarat, Karnataka and Tamil Nadu. Further, it is a major player in wireless telephony through its investment in Birla Tata AT&T Ltd (BTAL) and the pending merger with BPL - the footprint of both these companies covers the states of Delhi, Madhya Pradesh, Chattisgarh, Gujarat, Maharashtra, Goa, Andhra Pradesh, Tamil Nadu, and Kerala, as well as the city of Mumbai.

The Tata Power Company Ltd, one of the major group companies, is leading the initiative in building telecom infrastructure and offering broadband services. In totality, the group has committed very large investments in the telecom sector.

VSNL is a domestic and NYSE-listed company with a FY2001 turnover of Rs 7,966 crore, and a workforce of around 3,000 employees. The company has built up a very strong position in international long-distance (ILD) service, Internet service and other value-added services, and possesses a national long-distance (NLD) licence. With VSNL, the Tatas will be able to accelerate their plans to provide NLD, ILD and other value-added services, thus meeting their objective of being a fully-integrated telecom services provider.

VSNL also enjoys long-standing relationships with international carriers, solid infrastructure, both domestic and international, professional management, and a pool of skilled manpower. The Tata group plans to leverage these strengths to evolve an effective and aggressive business and product strategy, which will enhance shareholder value.