New Delhi: Videsh Sanchar Nigam Ltd (VSNL) faces payment default that may go upto Rs 500 crore with its international partner US telecom major WorldCom admitting to an accounting fraud of $ 4 billion raising fears of bankruptcy.

WorldCom whose profits were overstated by about $ 4 billion and which is now likely to file for bankruptcy owes VSNL upto Rs 500 crore as settlement charges for carrying telephony traffic over the past three months.

"I would not like to discuss the issue for another two days, till the time we do some more groundwork," S K Gupta, managing director of VSNL said.

The comments comes amid speculation on the impact on VSNL's revenues if the WorldCom, which has been one of its biggest partners for incoming and outgoing calls between India and US, fails to pay its dues.

In December 2001, VSNL had signed agreement with WorldCom for continuing mutual support in data and voice services in the US and Indian markets.

According to some estimatesm, MCI WorldCom carries over 60 per cent of VSNL's total US voice and data traffic.

In a two-line statement issued late on June 27 night VSNL had said that it was talking to WorldCom and assessing the issue.

"We will be able to comment on the matter once we have more clarity," a VSNL spokesperson had said.

Under normal circumstances calls made to the US from India would be routed by VSNL to WorldCom which would then connect it to the American local access providers.

Similarly, calls from US to India would be routed by WorldCom to VSNL. Since the number of incoming ISD calls are higher than outgoing calls from India, WorldCom has to pay the difference which according to sources may be as much as Rs 500 crore in the past quarter as international carriers settle their bills after a lag of three to four months, industry sources said.

If the WorldCom files for bankruptcy and is unable to pay its dues to newly privatised Indian company, VSNL could face losses of anywhere between Rs 100 crore to Rs 500 crore, sources added.

PTI