Tata Comm (VSNL) settles case with Reliance Globalcom Ltd

A man walks past a Tata Indicom ad in Orissa. Tata Communications says it has paid $19 mn in damages to the UK telco. Sanjit Das / Bloomberg The Tata group firm has proposed to sign a deal with Flag Telecom, now Reliance Globalcom Ltd, that both parties “would agree not to pursue the case further”, this person said on condition of anonymity. A Tata Communications spokesman confirmed in an email reply that the company is ending the dispute as it has already paid $19 million (Rs93.3 crore now) in damages, as laid down in an international tribunal’s final award. A Reliance Globalcom spokesman declined comment. The dispute related to Videsh Sanchar Nigam Ltd (VSNL), now Tata Communications after the Tata group acquired it, denying Flag Telecom free access to its cable landing station in Mumbai in 1998. Flag Telecom had wanted access to enhance the capacity of its Europe-Asia cable system from 10 gigabytes per second (gbps) to 80gbps. VSNL had then said it was not under any obligation to provide access to Flag Telecom for maintenance and construction of its cable system. Reliance Globalcom, which spearheads the global telecom operations of Reliance Communications Ltd, part of the Reliance-Anil Dhirubhai Ambani Group, had acquired the unlisted Flag Telecom in 2003. Tata Communications, which has a formidable presence in the international long distance telephony market, had revenues in excess of $2 billion in fiscal 2008. Flag Telecom filed a complaint with the International Chamber of Commerce (ICC) in December 2004. In May 2006, an ICC arbitration panel asked VSNL to allow Flag Telecom access to the cable landing station, which VSNL contested. Later, in August 2008, the tribunal directed VSNL to pay Reliance Globalcom $19 million, plus interest from May 2006 towards damages, against the $385 million claimed by Flag Telecom.