VSNL Buys Top VoIP Carrier

Posted on July 28, 2005  /  6 Comments

VSNL Buys Top VoIP Carrier

India’s incumbent international operator, VSNL, announced today that it had agreed to buy Teleglobe, the largest international voice over IP (VoIP) carrier in the world — and former Canadian monopoly overseas voice carrier. Should the deal meet with shareholder approval and pass regulatory review, the merged company — which also includes the recently integrated Tyco Global Network — would become one of the largest multinational providers of voice, Internet, and bandwidth services.
Teleglobe became the largest carrier in the 30 billion minute international VoIP market when it acquired ITXC in 2004. Although VoIP represented under 15 percent of the global call market in 2004, it is growing at double to triple the rate of the traditional public switched voice market. Combined with Teleglobe’s wholesale voice operations around the world, VSNL will become the fifth largest carrier of voice minutes in the world.
Although VSNL is a significant carrier of voice minutes in its own right, its international Internet infrastructure has been limited to a few routes out of India. With the acquisition of Teleglobe, VSNL will be adding backbone Internet connectivity to 14 new countries, bringing its total to 17. Still, the combined VSNL and Teleglobe international Internet backbone puts it only in the top 30 of global backbone providers. This may change rapidly if VSNL builds out its Internet infrastructure to serve India’s growing demand for corporate bandwidth.
By purchasing Teleglobe, VSNL will be pairing Teleglobe, a major wholesale services provider, with the Tyco Global Network, a major provider of wholesale submarine and terrestrial network capacity that VSNL acquired recently. As of early 2005, Teleglobe owned or controlled part of 90 submarine and terrestrial network systems, as well as satellite connectivity around the world. Although other carriers, such as AT&T and MCI, may connect to more individual city locations, few companies are known to control capacity on as many different systems.

source: TeleGeography


  1. There is a certain delicious irony in the privatized former international monopoly of the rich commonwealth country of Canada being bought by the privatized former monopoly of the poor commonwealth country of India. I hope this will not cause the Canadian legislators to block the deal.

  2. One of the things we had discussed some years ago was how incumbents like VSNL, beneficiaries of asymmetric international settlements were going to survive when the settlements system collapses and/or they lose their monopoly over the international gateway. At that time their future looked gloomy.

    I am pleasantly surprised how VSNL was/is able to reinvent itself into a global player. In fact it will contribute to a quicker demise/transformation of the international settlements system when it provides end-to-end services between a large number of countries where it has presence now.

    The acquisition of Teleglobe also ties in well with VSNL’s Tyco purchase. As this analyst says:
    “Tyco is a wholesale capacity operator which is a layer-one business, while Teleglobe is more of a services player or a layer three business,” said Mr. Kowal. “Together you have a combined operation with a wholesale capacity that puts it right on top of the global market.”

  3. VSNL had been the monopoly incumbent long distance opearator without any direct ownership of the end customer. Resultingly VSNL had to face the incumbent government intigrated “All License Operator” BSNL as its competitor. Therefore, so long as VSNL stands firmly on its own legs in its country, it must look outside beyound the shores of India for opportunities.

    With TGN acquistion, VSNL gets to reach most of the countries those count in the world and with Teleglobe operations in hand, it has opportunities in voice as well.

    The skill lies in managing the acquired businesses to penetrate deep into the future.

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