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Videsh Sanchar Nigam (VSND)

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Thursday 05 August, 1999

Videsh Sanchar Nigam

1st Quarter Results

30 July 1999   

                    FOR THE QUARTER ENDED 30 JUNE 1999

Videsh Sanchar Nigam Limited (VSNL). India's exclusive provider of international
telecommunications services, today announced its unaudited (provisional)
financial results for the first quarter of the financial year 1999-2000.

Key Highlights

*  Q1 Net Profit at Rs.355.1 Crores, Gross Profit at Rs.548.4 Crores.
*  Revenues from Value-added Services double - Rs.172.9 Crores (Q1 ending June
   1998 - Rs.81.4 Crores).
*  Q1 Internet revenues grow 163% to Rs.53.9 Crores (Q1 1998 Internet revenues _
   Rs.20.5 Crores).
*  Leased channel revenues grow by 51%, Frame Relay revenues by 400% versus Q1
*  Q1 total revenues at Rs.1780.9 Crores.

VSNL today declared strong financial results for the quarter ended June
1999. The Net Profits of the Company have risen to Rs.355.1 Crores for
the quarter (against Rs. 311.3 Crores in Q1 1998), showing a growth of
14.07%. The Gross Profits of the Company have grown to Rs.584.4 Crores for
the quarter, against Rs,470.1 Crores for Q1 1998, exhibiting a growth of 20%.

The  growth in Net Profits arises out of strong operational performance of the
Company, as the 'Other Income' in the current quarter has been lower at Rs.91.1
Crores against Rs.123.8 Crores in Q1 1998, while the impact of taxation has been
higher by Rs.169 Crores (Rs.140.3 Crores in Q1 1998).  The lower 'Other Income'
signifies significantly lower depreciation of the Rupee which was only 95 paise
in Q1 1999 as against Rs.1.81 during Q1 1998.

The telephone traffic for the quarter ended 30 June 1999 aggregated to Rs.524.47
million paid minutes compared to 457.18 million paid minutes recorded during the
corresponding period of the previous year, representing a growth of 14.72%. The
total telephone traffic for the year ended 31 March 1999 was 1935 million paid

VSNLs  total  revenues  in  Q1 1999  amounted  to  Rs.1780.9  Crores  against
Rs.1690.8 Crores in Q1 1998, exhibiting a growth of 5.33%. The lower growth  in
revenues is commensurate with the fall in accounting rates of about 10%  in
the corresponding period and a growth in traffic of 15%.

Value-added Services 

There  has  been  a strong growth in Value-added Services provided  by
VSNL, showing positive results of its diversification activities. VSNL's
International Private  Leased Line Services, Internet and Managed Data Services
are primarily drivers for India's IT industry.

*  Leased channel revenues have grown to Rs.77.3 Crores (Q1 1998-Rs.51.1
   Crores), exhibiting a growth of 51.27%. Leased line revenues now comprise
   4.6% of VSNL's Gross Revenues. 64 Kbps equivalent leased circuits have grown
   to 1238 from 957 in Q1 1998, exhibiting a growth of 29.36%.

*  Internet revenues have grown to Rs.53.9 Crores from Rs.20.5 Crores in Q1
   1998, exhbiting a growth of 162.93%.  The above financial growth is despite a
   steep reduction in Internet leased line tariffs, effected from 1 April 1999,
   as per TRAI recommendations.  Internet revenues now comprise 3.22% of VSNL's
   Gross Revenues.

*  Frame Relay revenues have grown to Rs.8.5 Crores in Q1 1999 as against Rs.1.7
   Crores in Q1 1998, exhibiting growth of 400%.

*  Other Value-added Services, including TV Uplinking. GEMS 400, etc.,
   contributed Rs.33.4 Crores in Q1 1999 against Rs.8.1 Crores in Q1 1998.

Commenting on the results, Shri Amitabh Kumar, Acting Chairman & Managing
Director, VSNL, said, 'VSNL has proved to be a strong value creator for its
customers and shareholders.  Our investments in new technologies and
infrastructure strongly position the Company to take advantage of the emerging
opportunities with the increasing liberalisation in the telecommunications

VSNL's growing revenues in Value-added Services mirror the growth of the IT
industry in India.  Recent developments, including the new IT Policy which gives
a thrust to investment in telecommunications, and the new tariff structure now
in place for telephony services, will continue to drive the revenues of the
Company in the current year.'

VSNL's Diversification in Value-added Services

SI               Item                  Quarter ended    Quarter Ended    Growth
No.                                    30 June 1999     30 June 1998       %

1.   Telephone Traffic (million          524.47            457.18         14.72%
2.   Net Telephone Revenue @Rs.10     Rs.524.47 Crores  Rs.457.18 Crores  14.72%
     per minute
3.   Value-added Services:
3.1  Leased Channels                  Rs.77.3 Crores   Rs.51.1 Crores    51.27%
3.2  Internet                         Rs.53.9 Crores   Rs.20.5 Crores   162.93%
3.3  Frame Relay                      Rs. 8.5 Crores   Rs. 1.7 Crores   400%
3.4  Other Value-added Services
     including TV Uplinking           Rs.33.4 Crores   Rs.8 Croes
     Total Value-added Service
     Revenues                         Rs.172.9 Crores  Rs.81.4 Crores
4.   Value-added Service Revenues
     as percentage of Net Telephone      33%            17.8%

VSNL has exhibited and achieved higher operational efficiency.  The network cost
has increased marginally from Rs.1180.7  Crores in quarter ended June 1998 to
Rs.1189.5 Crores in quarter ended June 1998 (0.75%) despite a growth in traffic
of 14.72% and growth in traffic revenues of 8.1%. The telephone revenue as a
percentage of total revenue for the quarter ended 30 June 1999 works out to
83.92% as compared to 86.22% for the corresponding period in the previous year.

Other Highlights

*  VSNL completed and commissioned the ground segment for INSAT-2E satellite and
commenced uplinking in June 1999 for Indian boradcasters.  A new Standard-A
earth station has been commissioned for this purpose at Chennai.

*  A new Standard-A earth station was commissioned at Arvi in June 1999 at a
   cost of approximately Rs.40 Crores.  This is the third Standard-A earth
   station commissioned at Arvi, and brings the number of operational antennas
   in the western region to eight operating on various satellites of the
   INTELSAT system.

*  Internet Central Control Facility (ICCF) comprising of a highly advanced
   monitoring and control system for Internet, and an international Internet
   Exchange was commissioned in April 1999.

*  ISP Business Picks Up. Commissioned services to 33 ISPs.  Links to 20 ISPs
   under commissioning.

*  Internet Value-added Services enhanced with Global Roaming, E-Mail to Paging,
   Page Mail Services launched in India.

*  SEA-ME-WE-3 construction and testing completed.  System awaiting
   commissioning by the consortium.

VSNL has signed an MOU in July 1999 for operating and financial performance with
the DOT.
VSNL performance is currently on target to meet the MOU requirements.

Internet Version available at:
                                Media reports - Press Release Section.


                                                   (Rupees in million)
                        For the              For the       For the year
                        Quarter ended        quarter       ended
                        30.06.99             ended         31.03.99
                        (Unaudited)          30.06.98      (Audited)*

1. Net Sales/Income from
        operations          16,898             15,670       68,315
2. Other Income                911              1,238        3,441
   TotaL Income             17,809             16,908       71,756
3. Total Expenditure        12,325             12,207       51,812
4. Interest                      0                  0            0
5. Gross Profit(+)/Loss(-)   5,484              4,701       19,944
   after interest but 
   before depreciation 
   and taxation 
   ((1 + 2)- (3 + 4))
6. Depreciation                243                185          800
7. Provision for Taxation    1,690              1,403        5,894
8. Net Profit (+)/Loss(-)    3,551              3,113       13,250
   (5-(6 + 7))   
9. Paid-up Equity Share 
     Capital                   950                950          950
10. Reserves excluding           -                  -       53,256 
    revaluation reserves
    (as per balance
    sheet of previous 
    accounting year)
11. Earnings per share (Rs.)  149.52            131.07      139.47
                             (Annualised)       (Annualised)

* Subject to CAG audit

1. The above results were taken on record by the Board of Directors of the
   Company at its Meeting held on 30th July 1999. 
2. Interest on GDR Funds has been considered as income earned during
   the construction period and adjusted against carrying cost of the assets as
   done in the previous year.
3. Figures of previous year have been regrouped wherever necessary.
4. The Company has made a detailed assessment of risks posed to its operations
   by the year 2000 (Y2K) problem and has initiated, since 1997, appropriate
   risk mitigation measures.  VSNL has adopted BSI PD-2000 standard as
   definition of Y2K readiness.  Although most of the systems are Y2K-ready,
   full readiness is expected to be achieved by November 1999.  The company has
   a budget estimate of approx. Rs.363 million for the purpose.  Detailed
   contingency plans are under preparation.

                                     For Videsh Sanchar Nigam Limited

Place: Mumbai                                            Amitabh Kumar
Date:  30 July 1999              Acting Chairman and Managing Director


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