New Delhi: A proposed initial public offering, or IPO, of shares in the state-owned Bharat Sanchar Nigam Ltd, or BSNL, India’s biggest phone services firm by revenues, may not take place this fiscal year because large worker groups at the state-owned company are opposed to the share sale and parliamentary elections are to be held before next summer, a senior official in the communications ministry has said.
“The government has an ‘open mind’ on the issue. We are considering whether to go for an IPO or not, as it is not a good time for listing a company such as BSNL,” said the official, who did not want to be identified because a final decision on the matter has not been taken. “The government is also considering the fact that listing will be ‘unpopulist’ in an election year.”
Call on hold: BSNL chairman and managing director Kuldeep Goyal says the company’s public offering will be considered only after consultations with employee unions. BSNL hoped to raise $10 billion from the issue. Photograph: Harikrishna Katragadda / Mint
Most of BSNL’s 304,000 employees, represented by four large worker unions, oppose the share sale, which BSNL in the past has said will value the firm at around $100 billion (Rs4 trillion). The proposed sale of up to 10% of BSNL’s equity would have been worth $10 billion.
BSNL’s finance director S.D. Saxena said early this year that the phone firm expected to conclude the share sale in a year’s time. Kuldeep Goyal, chairman and managing director of BSNL, said it was difficult to predict whether the listing will happen before the end of this fiscal year.
“Eventually, the listing will happen, but it is difficult to say when. We will be consulting the (employee unions),” he said. “There have been some positive signals from individual employees on the Esop (employee stock option plan) proposal. The IPO issue will be taken up only after a green signal after consulting the employee unions.”
Goyal said an investment banker for valuing the company and managing the share sale will be appointed soon, but did not specify a time frame for this either. In an attempt to sweeten the deal for employees, the government has proposed that employees be allotted shares at a significant discount.
BSNL’s employee unions stuck to their opposition to the share sale, saying they do not want the firm to be listed which, they worry, may eventually lead to privatization. “We are completely against the proposal for public listing of BSNL,” V.A.N. Namboodiri, general secretary of BSNL Employees Union, said. This group represents more than 140,000 workers.
Another trade union, Citu, or Centre for Indian Trade Unions, a Communist group, has sought the intervention of Tamil Nadu chief minister M. Karunanidhi to resolve the issue. Communications minister Andimuthu Raja belongs to Karunanidhi’s Dravida Munnetra Kazhagam party, a member of the Congress-led coalition government at the Centre.
“In the recent past, due to your firm stand not to allow disinvestment of Neyveli Lignite Corp. Ltd, the government of India was prevailed upon to withdraw the proposal...” to divest stake in the mining company, Citu president M.K. Pandhe said in a letter to Karunanidhi on Saturday. “In a meeting, the communications minister respected the feelings expressed by the workers’ representatives, but it appears that the Union ministry of finance is determined to go ahead with the proposal. I would therefore request you to take a similar stand on the question of disinvestment of BSNL.”
A Mumbai-based analyst predicted the proposed BSNL share sale would be attractive from the investors’ point of view if the union opposition can be tackled. “BSNL IPO will offer more choice for the investors. But, the union issue has to be addressed first,” said Harit Shah, analyst with Angel Broking Ltd.