The Hindu Business Line : BSNL mulls public issue to raise $10 b

Expansion plans
Proceeds to fund expansion of its GSM mobile network
Employees union says the company does not need private money to fund expansion.

Our Bureau

New Delhi, Jan. 14 State-owned telecom firm Bharat Sanchar Nigam Ltd (BSNL) is considering an initial public offering (IPO) to dilute up to 10 per cent of its equity to fund expansion plans.

The value of the company is estimated at $100 billion, according to company officials.

The Communication and IT Minister, Mr A. Raja, said at a press conference, “We will look into the option of going for an IPO. The Department of Telecom will discuss the issue and take a decision.”

He, however, refused to give any time frame for the proposed IPO. BSNL’s revenue for 2006-07 stood at Rs 39,750 crore, with net profit of Rs 7,805 crore.

The PSU has an immediate investment plan of Rs 15,000 crore to expand its GSM mobile network across the nation. BSNL officials said that the IPO could fetch anywhere between Rs 20,000 crore and Rs 40,000 crore depending on the market conditions. They said that the fund would enable BSNL to roll out network into the remote areas of the country. The company has 35 million fixed line subscribers and over 30 million mobile users.

The BSNL Employees Union is, however, opposing the move on the grounds that the company did not need private money now to fund its expansion plans.

“The proposal to disinvest 10 per cent of BSNL is completely unwarranted and will be strongly opposed by the more than 3 lakh work force of BSNL. If the Government goes ahead with its plans then we will be compelled to resort to agitattion including going on an indefinite strike,” said Mr V.A.N. Namboodiri, Convenor, Joint Forum of BSNL Unions.

“There is no dearth of money with BSNL for its development and expansion. Almost Rs 40,000 crore is available with BSNL, which can be utilised for the above purpose. In fact, it is not lack of finance, but lack of GSM lines and other telecom infrastructure, which is hampering the growth and expansion of BSNL,” said Mr Namboodiri.

If BSNL goes ahead with its IPO plans, then it will easily be the biggest in the telecom sector. Bharti Airtel had offloaded 10 per cent stake in 2002 to raise Rs 833 crore, and in 2007, Idea Cellular had raised around Rs 2,400 crore through an IPO.

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