In what could be the mother of all Indian public issues, Bharat Sanchar Nigam Ltd on Friday moved closure to a possible listing on the bourses with a share offering that might raise as much as Rs 40,000 crore.
Employee unions at the state-owned telecommunications company agreed to drop their opposition and "respond positively to suggestion of listing the company," the Communications Ministry said in a statement. The unions have agreed to give their final response by Monday, it said.
Reacting to the union’s decision, SD Saxena, Director (finance) at BSNL said: "In that case it is a very positive development for the listing of the company."
When asked to disclose the size of the issue, he said: "The onus of deciding the size of public issues lies with the
BSNL would have to offer a minimum of 10 per cent of its equity, as per listing rules, and officials familiar with the development said the offering could aim to raise about Rs 40,000 crore or $10 billion.
That would put the company's valuation at Rs 400,000 crore or $100 billion, more than the combined value of all the four listed telecom companies in the country – Bharti Airtel, Reliance Communications, Idea Cellular and Spice Telecom.
A senior Department of Telecommunications offical, who spoke on condition of anonymity, said the proposed IPO would be a combination of fresh issue and divestment of government shares as was done in the case of power generation company.
In financial year 2006-07, BSNL earned a net profit of Rs.7805 crore on a topline of Rs.39,750 crore. However, it lags behind Airtel and Vodafone in GSM numbers. BSNL with 18.5 per cent market share has 36.6 million GSM subscribers as against 64.3 million and 45.7 million subscribers of Bharti Airtel and Vodafone respectively.