Profits took a beating in the second quarter of 1999-2000 due to reduced tariffs, coming down to Rs 346.6 crore as compared to Rs 424.7 crore recorded in the same quarter of 1998-99. Total income during the quarter was Rs 1785.5 crore down from Rs 1901.7 crore. ``VSNL profits fell when it has a monopoly in the overseas telecommunication sector. What will be the situation when this segment opens up after three years,'' said an analyst.

Addressing an analysts meet after the results were taken on board VSNL CMD S K Gupta said the reduced income could be attributed to lower other income during the quarter which dropped to Rs 122.3 crore from Rs 220.5 crore in the comparable quarter of 1998. "The lower growth in revenues is commensuratewith the fall in accounting rates of 10 per cent in the corresponding period and a growth in traffic of 19.53 per cent," Gupta added. Gross profit (excluding other income) was Rs 440.1 crore (Rs 439.8 crore).

Beating the negative trend, revenue from value-added services jumped to Rs 141.4 crore (Rs 133.5 crore). Internet revenue was up 47.99 per cent to Rs 44.1 crore despite the over 30 per cent drop in tariffs. Frame relay services revenue was also up 166.67 per cent to Rs 88 crore, while other value-added services contributed Rs 88.5 crore (Rs 100.5 crore). In all value-added services accounted for 25.66 per cent of the net telephone revenue.