Mumbai: It has become a shameless story with no end in sight. If the US corporate world sneezes, Indian companies get the cold.
After Dhabol Power Corporation became a direct victim of the Enron collapse, now it is the turn of Indias international phone service monopoly Videsh Sanchar Nigam Ltd (VSNL) to bear the brunt.
 As the US telecom giant WorldCom comes closer to bankruptcy, VSNL could lose close to Rs 450-500 crore almost a quarter of the companys Rs 2,100-crore profit last year. The US company owes VSNL three months call-completion charges for phone calls made between the US and India between April and June 2002.
According to estimates, VSNL used to get an average of Rs 150 crore every month from WorldCom, and it was normally paid after a three-month lag.
The Mississippi-based WorldCom ran into trouble after US regulators charged it with fraud when the company admitted that it booked $3.8 billion in expenses improperly as capital investment.
 The company, which was audited by Arthur Anderson that had to close shop for being accused in the Enron scandal, said it would restate its results for the last five quarters, erasing all profits from the beginning of 2001.
More trouble
There was speculation that the software provider Mahindra-BT has also been affected by the trouble at WorldCom as it had a contract with the troubled telecom carrier. But the company has issued a statement that there is no outstanding payment from the US company. MBT, engaged in application software in operation support systems like billing systems for WorldCom, has had a five-year relationship with the US major. "The contract still exists. A customer is a customer. Now the focus will be to effectively manage business and financial risks while executing projects for WorldCom," says an MBT official.
 WorldCom has been VSNLs biggest partner for calls between the US and India. So the debacle is expected to give a big boost to WorldComs main competitors in the US market AT&T and Sprint as WorldComs Rs 1,800-crore-a-year business from India will be divided between the two.
Though WorldCom assured VSNL on 28 June 2002 that it would pay all its dues, fear still persists. It is feared that WorldCom, which has $30 billion in speculative-grade (or junk) debt, may not be able to secure a crucial $5-billion funding package to keep it afloat. As it looks like, it would be very difficult for WorldCom to secure loans. If the group is not able to secure loans, it will be left with insufficient funds to cover the expenses and interest payments on its $30-billion debt. Therefore, WorldComs chances of going for bankruptcy are pretty high. "At present our aim is to recover maximum dues from WorldCom," says a senior VSNL official. "If WorldCom fails to pay us the dues, we will take appropriate legal action that would be in the interest of our shareholders."
Future tense
Earlier, Sartec, another US carrier, had filed for bankruptcy as VSNL had negligible business with the company. But it had no major impact. WorldCom accounts for about 40 per cent of the total traffic from the US. It pays to the tune of Rs 150 crore per month to VSNL as the difference of settlement charges. One of the options being considered by VSNL is that it would stop incoming traffic from WorldCom. Currently, VSNL has agreements with five international carriers for carrying traffic from India to the US and vice versa. These are: WorldCom, AT&T, Sprint, Startec and IDB.
VSNL, a New York Stock Exchange-listed company, saw its shares plunging by almost 7.4 per cent (Rs 11.8) on the domestic market to close at Rs 147.40 amid huge volumes. More than 1.6 million shares changed hands nearly five times the past months daily average of 326,000.
VSNL was recently privatised with the central government selling parts of its stake to the Tatas. The company receives 88 per cent of its operating revenue from international phone services. Though the government allowed other players to get into international telephony VSNL still faces no competition.
Now investors are worried whether WorldCom will change VSNLs fortunes and, if so, to what extent.
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