VSNL profit slides

NEW DELHI, India -- Telecom giant VSNL has posted a net profit for the December quarter that was down 10.7 percent over last year.

The earnings were slightly below analyst expectations.

VSNL on Wednesday said it earned a net profit of 3.57 billion rupees ($73.5 million) in the three months through December, for its third quarter.

Sales fell a similar amount, down 10.8 percent for the third quarter to 17.4 billion rupees ($358 million).

The same time the year before, it made a net profit of 4.0 billion rupees on sales of 19.5 billion. Part of the drop stems from a change in accounting rules, however.

New York-listed VSNL -- full name Videsh Sanchar Nigam Ltd. -- is India's monopoly overseas-call telephone company. It is also the largest Internet service provider in the country.

VSNL has 650,000 Internet subscribers. It was also India's first ISP.

One of the 'nine jewels'

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VSNL is slated to lose its monopoly on overseas calls this year. The country has already opened up the local-call business to competition.

Against that backdrop, VSNL has been looking to build out its online business and build out its network infrastructure.

The government owns 53 percent of VSNL and hopes to sell off a 25 percent stake in the company in February.

VSNL sale is a cornerstone of India's privatization program. The government calls VSNL one of its "nine jewels" -- the navaratnas -- of the public sector.

India is trying to sell off part or all of 48 government-owned companies.

Air India plans scrapped

But last October, the Indian government scrapped plans to offload a large stake in Air India, after interested bidders dried up. The airline's business was then further dented by the September 11 attacks.

The VSNL sale itself was put off from last year.

VSNL stock also trades on all the main Indian exchanges. The main Mumbai index was down 0.8 percent in afternoon trade, as most Asian markets slid.

But VSNL shares rose slightly after its earnings. Reuters news service states they were up 2.4 percent at 141.25 rupees about 20 minutes after they were announced.

The company has around 2,900 workers, and also owns an undersea fiber-optic network and a satellite network.