The Tata group has accused the government of not giving it a chance to negotiate the compensation package for Videsh Sanchar Nigam Ltd while advancing the deadline for opening up the international long-distance sector by two years to 2002.

It has now asked for fresh incentives, including extension of the agreement with Bharat Sanchar Nigam Ltd for routing its international long-distance traffic.

Company executives told Business Standard that the government had firmed up the compensation package before the group acquired control of VSNL in February 2002.

Pointing out the series of events prior to VSNL's divestment, they said the government had issued a letter on January 18, 2002, stating that Mahanagar Telephone Nigam Ltd and BSNL would route their international long-distance traffic through VSNL's network.

On January 29, 2002, the government issued another letter stating that the compensation package for VSNL was final. The Tatas took control of the company on February 13, 2002.

The sources said while the bidders were aware of the letters, the compensation package for VSNL was decided when the company's board was awaiting a new management.

"By the time the Tatas took control, the government had decided that the licences awarded to VSNL for offering national long-distance and Internet services were good enough compensation. But VSNL's revenues have dropped 50 per cent in the last two years," said a company executive.

VSNL has now sought fresh compensation, including extension of the agreement with BSNL for routing international long-distance calls till the carrier access code is in place.

The carrier access code will enable subscribers to choose their international long-distance operator.

BSNL's agreement with VSNL is slated to end on April 2004, after which the public sector company plans to start its own international long-distance services. VSNL has also offered to share its international long-distance infrastructure with BSNL.

Meanwhile, VSNL on Saturday issued a statement saying though there were some indications that various shareholders had been contemplating filing class action suits on the subject of adequate compensation for the premature termination of VSNL's international long-distance monopoly, it had no knowledge of such suits having been filed in the United States by American Depository Receipt holders.

Telecom tangle

• VSNL's ILD market share drops by 30-40 % due to competition from Bharti and Data Access
• Falling ISD tariffs have been a major strain on VSNL bottomlines; revenues drop by more than half
• Over 90 per cent of company's revenue comes from BSNL's 35 million fixed-line users
• BSNL plans to launch its own ILD services, major set back for VSNL