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% of the paid up capital in its wholly-owned subsidiary VSNL Lanka Ltd. The shares have been acquired by Sunshine Holdings PLC, a Sri Lankan conglomerate for about Sri Lankan Rupees 75 million.

Sunshine Holdings PLC has interests in pharmaceuticals, travel & tourism, tea & rubber cultivation and managing portfolio investments. Sunshine Holdings PLC has actively supported VSNL Lanka in its growth plans over the last few years; Mr. Vish Govindasamy MD of the Sunshine Group has been a director on the Board of VSNL Lanka since its inception. Sunshine Holdings PLC has the option to acquire an additional 5% of VSNL Lanka's share capital in the next 12 months at fair market value.

"This partnership with Sunshine Holdings PLC will enable VSNL Lanka to capitalize 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 Mr. Rajiv Dhar, CFO of VSNL.

"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," said Mr. Vish Govindasamy.

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 would 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.