CORPORATE FRONT: INTERVIEW
"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.
Controversy 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. |