Bharat Sanchar Nigam public offer decision stuck in meetings (lead)

August 7th, 2008 - 6:27 pm ICT by IANS  

New Delhi, Aug 7 (IANS) The state-owned telecom company Bharat Sanchar Nigam Ltd (BSNL) is yet to take a decision on its proposed initial public offer, telecom minister Thiru A. Raja said here Thursday. Raja said if BSNL entered the primary market, each employee would be offered 500 shares at Rs.10 per share. For others, a premium will be charged, with the shares being in the price band of Rs.300-400 per share - depending on the market condition.

This would be done keeping in mind that the company got a 3G spectrum block Thursday.

Besides this, the Department of Telecommunications (DoT) has granted Rs.20 billion to the telecom major, the amount it lost after the Telecom Regulatory Authority of India (TRAI) scrapped the Access Deficit Charge - a percentage of revenues of private companies that went to BSNL.

At Rs.300-400, BSNL’s market capitalization would be around $100 billion (Rs.4.2 trillion) and a 10 percent stake dilution, if approved by the finance ministry, would mean the government would get richer by $10 billion (Rs.416.6 billion).

BSNL officials said the public offer could be made in the next six months.

“Internal discussions are on, and a decision will be taken soon,” BSNL chairman and managing director Kuldeep Goyal told reporters after a meeting with Raja.

BSNL’s director of finance S.D. Saxena said BSNL was “still very aggressive” on the valuation and cited the $21 billion (Rs.875 billion) valuation Vodafone gave to Hutchison Essar in 2007 when the British firm bought a controlling stake in the Indian operator.

“This company is 5-6 times bigger,” Saxena said. Merchant bankers had not yet been appointed for the IPO, he said.

However, the trade union was grim about the meeting with the union general secretary, V.A.N. Namboodri saying, “it is no lucrative offer, it is simply a bait being given to make us approve of the IPO.”

Though the public sector undertaking (PSU) company’s 304,000 employees have been offered 500 shares each at 10 rupees a share, while the IPO would be in a range of 300-400 rupees per share, the union has threatened to go on an indefinite strike if the IPO escapes through.

Even if the offer is revised about granting more than 500 shares to employees, the union will not move an inch and there will be a countrywide indefinite strike by the Joint Forum of Employees Union of BSNL.

Namboodri said a lot of issues were discussed in the meeting including the merger of BSNL with Indian Telephone Industries (ITI), state-run lead manufacturer of mobile infrastructure equipment.

He asserted that a merger of the two would not be healthy for either companies and would meet opposition from the union.

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Business |