Govt may go ahead with BSNL IPO plan despite union protest


Sops for employees

The Ministry has offered to give the 3.5 lakh employees 500 shares each at Rs 10

Each employee stands to gain Rs 1.5 lakh from day 1 of listing

The co plans to offload 10% equity to raise around $10 billion


Our Bureau

New Delhi, Aug. 7 Despite opposition from the company's employees union, the Government seems to be moving ahead on its plans to list State-owned telecom company Bharat Sanchar Nigam Ltd.

The Communications Minister, Mr A. Raja, on Thursday said that BSNL may be listed on the bourses in the price range of Rs 300-400 a share. While BSNL's management said that the listing could happen within the next six months, all efforts are now being made to garner the union's support.

The Ministry has offered to give the 3.5 lakh BSNL employees 500 shares each at Rs 10. In a meeting with the union leaders, Mr Raja said that each employee stands to gain Rs 1.5 lakh from day one of the shares being listed. The company is planning to offload 10 per cent equity to raise around $10 billion, which will make it the largest ever IPO in the country.

"This is the first time I am talking to the BSNL union on the issue of listing after its board took a decision on the same last week. We have explained to the union on how the IPO will benefit the company," Mr Raja said after meeting the workers. Allaying apprehensions of the trade unions regarding the IPO issue, Mr Raja said this would help the company to unlock the real value and get 'Navratna Status' which will result in more autonomy.

"Listing of BSNL will require placing of all the accounts of the company in public domain, which will result in transparency and help in better resource management," Mr Raja said in a statement. However, the BSNL Employees Union (BSNLEU), the federation of all the unions of the company, rejected the proposal.

Rejection

"This ESOP is a bait, we will not fall for it. We don't want any IPO in BSNL. We are not convinced with their argument that the IPO is beneficial for BSNL's growth," Mr V. A. N. Namboodiri, General Secretary, BSNLEU, said after the meeting with the Minister. The union has threatened to go on an indefinite strike if the Government goes ahead with the proposal to list the company.

BSNL officials admitted that it would be difficult to go ahead without the support of the employees union. "We will not rush into it. We will try to convince everyone. If there is a delay in the issue it is better. The valuation may go up," said Mr S. D. Saxena, Director (Finance), BSNL.

BSNL is the largest telecom operator in the country with nearly 75 million subscribers and has a paid-up equity capital of around Rs 5,000 crore. BSNL's revenue for 2006-07 stood at Rs 39,750 crore, with net profit of Rs 7,805 crore. The company expects to achieve revenues of Rs 50,000 crore at the end of this fiscal. Mr Saxena said the conservative valuation for BSNL was around $100 billion.

"Vodafone got Hutchison Essar at a valuation of $21 billion and BSNL is 5-6 times bigger," Mr Saxena said, adding that the process to appoint merchant bankers would start now. Simultaneously the company's board and the Government plan to have several rounds of meeting with the union leaders.