The Hindu Business Line : Collective equity

The stock purchase option offers BSNL unions a more effective bargaining chip than the strike, which simply hardens attitudes or postpones the inevitable.

The country’s largest telecom operator, Bharat Sanchar Nigam Limited’s (BSNL) offer of 500 shares each to its employees at par value is not unique in public enterprises. Maruti Suzuki (then called Maruti Udyog) began the employee stock option programme (ESOP) in the 1990s that, in turn, inspired the Department of Public Enterprises to frame its own guidelines in January 1998. Since then, various PSUs, including SAIL and ONGC, have issued ESOPs on listing. But t he BSNL offer is noteworthy because it has run into a wall of union resistance to the dilution of government equity with the main union calling the proposal a “ruse”. At stake is the mega issue to raise $10 billion that makes this the mother of all offerings in the IPO market. Also at stake is the best chance the employees have had so far to redefine their role in the future of the largest telecom operator, not to mention an opportunity to raise their own standard of living.

This is an opportunity for unions to re-examine their suspicions of management attempts at change. The stock purchase option offers unions a more effective bargaining chip than the strike, which simply hardens attitudes or postpones the inevitable. The BSNL offer is probably the best so far for employees to become shareholders and exercise influence more effectively than through collective refusal. Since the management is in no hurry to list, employees have time to catch up with the rapidly changing world of corporate democracy, as it were. A referendum on the proposal might help, given its size. ONGC sold 5 per cent of its equity to 43,000 employees. The National Aviation Co. Ltd that owns Air-India will also offer 5 per cent on its planned IPO this fiscal. Early this year, the State Bank of India made a discounted price offer to employee-shareholders in its rights issue. So, the 3 lakh employees of BSNL ought to take a hard look at what they stand to gain from this giant telecom operator that could become larger with the equity dilution and fresh capital infusion. They must realise that their counterparts in Maruti Suzuki, ONGC and SAIL have a stake in their respective companies that could prove more effective in determining their lives than a refusal to consider anything novel as a “ruse”.

If the unions are persuaded to agree, the BSNL proposal may ease the uncertainties generated by divestment. Public sector bank unions should keep their fingers crossed that this experiment works. If it does, public sector employee federations would have moved into the 21st century.

Related Stories:
Govt may go ahead with BSNL IPO plan despite union protest
BSNL-union talks on IPO deadlocked
BSNL public issue caught in DoT-unions cross talk

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