The deal comes only two weeks after VNSL completed its $130m purchase of Tyco Global Network, which gave it an undersea cable network that spans 60,000 km (37,280 miles) and the continents of North America, Europe, and Asia.
VSNL, which is controlled by Indian conglomerate Tata Group, aims to become a leading global player in wholesale voice and bandwidth and enterprise data services, according to director Srinath Narasimhan. He said the deal would move it closer to the size and network breadth needed to achieve the goal.
Srinath said the transaction would create a complementary combination of Teleglobe’s extensive wholesale Voice VoIP/TDM network, Global Tier 1 IP Network, and extensive customer base with VSNL’s integrated telecom services to strengthen its position as a leading international telecoms provider.
Teleglobe International Holdings, which is based in Hamilton, Bermuda with an operations center in Montreal, Canada, filed for bankruptcy protection in May 2001, an all too familiar process for international carriers at that time. It resurfaced after reorganization and in 2004 it made a net loss of $21.5m on income of $1bn.
Investors who own 66.2% of Teleglobe’s stock are in favor of the transaction, a feeling not unconnected with the fact that the $4.50 a share offer represents a 22% premium over the closing market price last Friday and a 59% premium over the average closing market price in the last three months.
VSNL has acquired a global outlook as a result of the huge traffic generated by Indian companies servicing markets in the West, and the two deals will transform its finances. In the year to March 31, it recorded net income of INR 7.56bn ($173.8m) on revenue 1.1% higher at INR 34.1m (783.6m).
