BSNL IPO plans likely to clear its unions
31 May 2008
New Delhi: State-owned telecom giant Bharat Sanchar Nigam (BSNL) could go public and hit the bourses soon, given that the trade unions are expected to respond positively to the government's call for the public sector company's initial public offering (IPO).
Estimates have valued BSNL at $100 billion (more than Rs4,00,000 crore). A dilution of just 10 per cent could get the company over Rs40,000 crore, that can be utilised by the state owned behemoth for further expansion of its services.
An official statement from the department of telecommunications (DoT) says that unions would respond positively to a suggestion for listing of BSNL before 3 June, which will in turn help BSNL in attaining ''Navratna'' status that is regarded as essential to maintain BSNL's image, and ensure its survival and growth.
The statement clarified that this was discussed during a meeting of the representatives of trade unions and IT and communication minister A Raja, where the topic of discussions included numerous issues including a 50 per cent hike in dearness allowance.
Around a month ago, BSNL chairman and managing director Kuldeep Goyal had said that there were no immediate plans for an IPO in the near future, citing adequate funds with the company as the main reason. Before that, IT and communications minister A Raja too had also ruled out an IPO.
Industry analysts peg the value of BSNL at over Rs4,00,000 crore, and indicate that previous suggestions for a divestment through the IPO route have been in the range of 10 per cent. Being a public sector company, the final decision on the divestment lies with the government.
BSNL operates in the ''rest of India'' region, which excludes the twin metros of New Delhi and Mumbai, where public sector telecom company MTNL competes with private players.
Across India, BSNL's investment plans for the medium term are estimated to be in the league of Rs60,000 crore, which covers mobile telephony and a much anticipated WiMax rollout that is said to be the key to revolutionise rural India.