New Delhi: Even as its employees union came out against a possible share sale, India’s largest phone services firm by subscribers and revenues, Bharat Sanchar Nigam Ltd (BSNL) said its estimated $100 billion (Rs3.9 trillion) valuation for the company is at the low end.
BSNL finance director S.D. Saxena, who on Monday told reporters that BSNL’s valuation was about $100 billion, told Mint on Tuesday that even that was at the lower end. “The valuation we talked yesterday, is still on the lower side, if you consider that our 67 million lines are valued at almost $250 each, and we also have real estate worth over Rs40,000 crore,” said Saxena.
BSNL said it plans to sell up to one-fifth of its shares through a public listing at an Indian stock exchange, followed by a listing at either New York Stock Exchange or Nasdaq, to raise cash for expansion of its network to more than 100 million lines by 2010.
Fund hunt: BSNL finance director S.D.Saxena. (Photo: Harikrishna Katragadda/ Mint)
The initial public offering (IPO) of shares, which could take up to a year for the government to finalize, if carried through, could be India’s biggest. Realty firm DLF Ltd last year raised Rs9,625 crore last year in India’s biggest IPO and Reliance Power Ltd is raising $3 billion this week in an IPO.
The company plans to invest around Rs60,000 crore over next three years in setting up new phone networks and scaling up existing infrastructure to serve more customers and could access debt to make up the capital required. BSNL had revenues of Rs39,715 crore in fiscal 2007.
Listing on a foreign stock exchange will help BSNL attract more foreign investors, said Saxena.
An analyst said a listing would help make BSNL much more competitive. “A listing puts pressure on performance—with investors and peers watching your health,” said Prashant Singhal, the telecom practice leader at Ernst and Young. He valued BSNL at around $80 billion since it is absent from the two biggest Indian telecom markets of Delhi and Mumbai.
Meanwhile, BSNL Employees’ Union, representing some 150,000 of the firm’s more than 350,000 workers, said it was against the IPO. “If they think it will improve the organization, look at how MTNL is still not performing despite listing almost 45% of its shares,” said V.A.N. Namboodiri, convener of the employees group. “We do not need an IPO now, since we already have over Rs40,000 crore in liquid cash.”