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"The Government Should Leave The VSNL Alone"

And, insists its former CEO, B.K. Syngal, it should focus on the value-added telecom services business.

B K SyngalControversy always chased him with the same aggression with which he raced down the information super-highway. That's why it was hardly surprising that the end came as it did. On June 30, 1998, Brijendra K. Syngal, the 58-year-old CEO of the state-owned Rs 6,436-crore Videsh Sanchar Nigam Ltd (VSNL), was retired by the Government of India. Ironically, the rejection of Syngal's strident plea for an extension of 2 years was delivered on June 19, 1998, the day he was felicitated by BusinessWeek with the Star Of Asia Award, 1998.

But then, the telecom strongman, who is credited with an explosive 215-per cent growth in the VSNL's gross revenues--from $515 million in 1991-92 to $1.61 billion in 1997-98--and the masterminding of India's biggest Global Depository Receipt (GDR) issue, has always been at loggerheads with the powers-that-be. Three years ago, he took on the then-Union Minister for Communications, Sukh Ram, on the postponement of the VSNL's GDR issue. While the latter insisted that the issue price should not be below Rs 1,400 per GDR, Syngal insisted on following the advice of his investment bankers instead, who suggested a band of between Rs 1,100 and Rs 1,200. In the process, the GDR issue was repeatedly postponed for 21 months, and he made no new friends.

Syngal also shared a turbulent relationship with the Department Of Telecommunications (DOT), which refused to clear his dream project of creating a $500-million regional hub to handle international telecom traffic from South Asian countries like Sri Lanka and Bangladesh. In a candid interview with BT's Radhika Dhawan, after his retirement, Syngal admits that it may have been his arrogance that proved to be his undoing. Excerpts:

Q. Your retirement is mired in controversy. Especially since you threatened to take the Government Of India to court

A. Well, these are the perils of visibility. The perils of being the head of a company that attracts attention Of course, I was misquoted; it was not my desire to sue the government The real question was the legal position: whether the extension was applicable to a government official who had not turned 58 on the day the new policy was announced (increasing the retirement age of government employees to 60 years). The conclusion was that any extension from 58 years to 60 years was legal. The way it was construed was that if the government's move to retire me at 58 was illegal, I would take recourse to the law.

But why were you not granted a 2-year extension?

I don't know. Probably because, if you remain in a particular place for too long, you tend to take things for granted. Maybe you get a bit rusty. Looking back, I had probably become a liability In the sense that I had upset many people.

Did you receive any such indications from the government?

The feedback I received was that I was honest, hard-working, and that I had taken the VSNL to great heights. At the same time, I was arrogant, had a rough, harsh tongue, and I wasn't a team-player. There was also the argument that since I had been with the company for 7 years, why not give someone else a chance to run the VSNL?

Your stint at the VSNL was quite controversial. For instance, your pet project, the $500-million regional hub, was opposed by the DOT

I still think it is an important project. The Information Technology Action Plan, submitted by the National Task Force on July 4, 1998, talks about the creation of a national superhighway--and the hub project fits in well with that. Ultimately, the hub will be able to connect about 15 Asian cities--high revenue-generating cities--through high-speed, high-quality optic-fibres. And we could get switching capacities from 2 megabytes to 155 megabytes.

What is the status of the project now that 2 of the 3 bidders have opted out?

There remains a solitary bid (jointly made by the $18.50-billion British Telecom and the $24.43-billion MCI). And if my leaving the organisation hastens the decision-making process, I will be pleased.

Do you feel that the DOT is exceeding its authority, and behaving like a bully?

I wouldn't term the dot a bully. I would say that the dot is very possessive about its near-monopolistic rights. The dot fears that if others are allowed to do what it is doing or share some of its businesses, it will lose out. That's not true. I remember that when I became the chairman of the VSNL, there was a concern whether the VSNL or the dot should be responsible for awarding single-window clearances. Several discussions were held, and it was decided in January, 1992, that the VSNL would be the authority to provide and decide the service. But I'm quite sure that if the dot had been responsible, things would have been different. Not many projects would have been implemented. And that is a fact. This is amply demonstrated by the fact that it is easier today to make an international call than a long-distance domestic call. The reason is that, unfortunately, our friends in the dot have to go through processes and permissions

Do you think that the DOT has become redundant?

Not redundant, but it has to change. There is no alternative.

There are allegations that, after the VSNL's GDR issue, you opposed a second one. In fact, you advised the government against it...

No, that's not true. I am not against the further dilution of the government's stake in VSNL. But there is a problem. We had made certain commitments to the global investors in our first GDR issue. While we finished what was in the VSNL's hands, other commitments--like the regional hub, additional autonomy, and the issue of shares to employees--were still awaiting approval by the government. I thought it would be embarrassing to go back to investors a second time without fulfilling the commitments we had earlier made. After all, if the government wants to maximise its investment, it has to first finish what it promised. Or else, the VSNL would have faced a credibility problem.

What do you feel about the government's drive to privatise the telecom sector?

Way back in 1992, I asked the government not to follow the licence-fee route to choose service-providers. Instead, I suggested options like revenue-sharing, profit-sharing, and a fixed fee per customer. But the government dreamt of earning huge sums from the service-providers. Has that materialised? And has it served the customer? At the moment, there are no private (basic telephone) services. And, obviously, the telecom companies are simply going to pass on the high costs to the consumer

Are you implying that the process was mismanaged?

Let's not say mismanaged, but some lessons should have been learnt from the experiences of other countries. Consider the manner in which cellular licences are granted in the UK. In the initial stages, the licence-fee was quite low because the cost of the technology was high. But, as the service grew, both industry and the government benefited.

What will be the major threats to the VSNL in the future?

One, the threat to its monopoly. Although the government has said that it will allow that status to continue until 2004, things may change before that. Second, the threat due to technological innovation (Internet telephony). Third, international pressure to reduce the accounting rates (the collection rates for international telephony). But then, there are some opportunities too: grabbing a share of the domestic long-distance telephony market, establishing the infotech superhighway, setting up the regional hub, offering other infotech-related services

What would you like your successor at the VSNL to focus on?

He, or she, should concentrate on value-added services, like satellite phones and the setting up of the regional hub. But then, the government has to remove the shackles. In the past 7 years, the VSNL has grown from a government-controlled, bureaucratic organisation to a more dynamic entity. So, the government should leave the VSNL alone.

What are your future plans?

I am not going to sit idle. I don't like advising or becoming a consultant. I have some offers. But I will decide only later.

Thank you, Mr Syngal.


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