New Delhi: The top management at state-owned Bharat Sanchar Nigam Ltd, or BSNL, India’s biggest phone company by revenues, favours a listing of its shares through an initial public offering (IPO) as a means to benchmark itself against private sector telcos, usher in transparency into its operations and help it become more efficient.
“If a part of your equity is listed, then everyone monitors your health,” Kuldeep Goyal, chairman and managing director of BSNL, said in an interview. “From that angle, I feel there is time to consider that (an IPO), but it depends on the government and employees.”
Kuldeep Goyal, chairman and managing director, Bharat Sanchar Nigam Ltd
BSNL, which counted about $3 billion, or nearly Rs11,800 crore, in cash flows last year, does not have a pressing need to take the IPO route to help finance expansion yet. “They may want to go public more for unlocking the value and also understand the kind of value they generate in the industry,” said Naveen Kulkarni, telecom analyst at Mumbai-based Religare Securities Ltd. “If they go public, their market capitalization could easily be around $35 billion,” he added.
Bharti Airtel Ltd and Reliance Communications Ltd, or RCom, India’s top two mobile phone service firms, enjoy a market cap of $43.5 billion and $38 billion, respectively.
The New Delhi-based BSNL, which has been losing market share in recent years to Bharti Airtel and RCom, has put in place an ambitious plan to garner one-third of the Indian telecom market by users in 2010, by when the fourth largest economy in Asia is predicted to have some 500 million telephone customers.
“We will be investing Rs15,000 crore this year, and Rs20,000 crore each year for the next three years as we expand our mobile networks and also introduce new services such as IPTV,” said Goyal.
IPTV is short for Internet protocol television, a technology that helps deliver television signals through an Internet connection.
BSNL already accounts for more than 25% of fixed line and mobile phones used in India, but nearly half of this comes from its 33 million-strong fixed line phone customers—a base that is slowly shrinking. All its growth in future then will have to come from mobile phone customers.
India’s telecom regulator, the Telecom Regulatory Authority of India, or Trai, said in October that BSNL’s share of the fast growing mobile telephony market was around 17.24% by subscriber numbers, while Bharti Airtel and RCom accounted for 23.9% and 17.3%, respectively.
Home to more than 200 million mobile phone customers, India is the fastest growing wireless market in the world, adding up to eight million customers a month.