Bharat Sanchar Nigam public offer still hanging in meetings (Lead)

August 7th, 2008 - 7:04 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, Raja told reporters here after a meeting with senior BSNL officials and trade union leaders.

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 scrapped the Access Deficit Charge - a percentage of revenues of private companies that went to BSNL.

At Rs.300-400, BSNL’s market capitalisation would be around $100 billion and a 10 percent stake dilution, if approved by the finance ministry, would mean the government would get richer by $10 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 said after the meeting with Raja.

BSNL’s director of finance S.D. Saxena said the company was “still very aggressive” on the valuation front.

He said Vodafone had valued Hutchison Essar at $21 billion in 2007 when it bought a controlling stake in the Indian operator, adding: “This company is five-six times bigger. BSNL’s valuation is around $100 billion.”

However, employees are unimpressed. Referring to Raja’s offer of BSNL shares at Rs.10, Joint Forum of Employees Union V.A.N. Namboodri said: “It is not a lucrative offer, it is simply a bait so we approve the public offer.”

He said the union would go on a countrywide indefinite strike if the BSNL decided to disinvest.

Namboodri also said the proposed merger of BSNL with Indian Telephone Industries (ITI), state-run lead manufacturer of mobile infrastructure equipment, would not be healthy for either company and would be opposed by the union.

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