Faced with stiff opposition from its employee unions over its proposed IPO, the BSNL management is considering a radical formula. It is toying with the idea of offering shares only to government employees with a ’considerable’ reservation for BSNL staff. If this proposal goes through, it will be the first such IPO in the country. The BSNL management plans to present this proposal to its striking union leaders soon.
The company is looking at a compromise formula as its plan to launch the country’s biggest IPO and raise about Rs 40,000 crore (over $10 billion) by offloading a 10% stake in the company has failed to take off so far.
Despite the public sector company’s management as well as communication minister, A Raja, holding talks with employees for several months now, the unions have not relented. In fact, BSNL employees have also threatened to go on an indefinite nation-wide strike and cripple the operations of the company, if the UPA regime goes ahead with the listing of the PSU.
“We are exploring the option of allowing only BSNL and other government employees to buy the shares. This will solve twin purposes — address the concerns of the employee unions as well as enable us achieve our objective of listing the company. This plan can be implemented only if the Department of Telecom as well as the unions accept it,” a top company source said.
But it remains to be seen whether this proposal goes through. For one, both DoT and the unions will have to agree. Secondly, there is no precedent of a public offering in India being restricted to certain section of public only. Moroever, if the sale of shares is restricted, it will not fetch the price that a regular disvestment would. Finally, even if such a float does take place there will be no appetite for these shares in the secondary market if FIIs and other investors are not allowed to buy.
And if they are allowed to buy BSNL shares through secondary transactions, then the original objections of the unions — fear of pri-vatisation, selling family jewels cheap etc — would not be taken care of.
Another BSNL source told ET that the PSU’s management was keen on going ahead with the listing, despite employee opposition, so that the company could be governed by corporate norms specified by Sebi. “The listing is not for the purpose of raising money for our expansion. We also want BSNL to be subject to corporate governance policies that all listed firms must subscribe to,” the executive added.
Earlier this year, the PSU had put the issue of a float on the back-burner after employee unions had threatened to go on an indefinite strike protesting the move. However, the issue was back in limelight last week when the government said the unions were favourable to the proposal.
“The unions will respond positively to the suggestion for the listing of BSNL before June 3, which will help BSNL in getting navratna status — very essential to maintaining its image and ensur-ing its survival and growth,” the government statement said. This led to fresh protests from the unions who alleged that they had given no such assurance and accused the communications ministry of misin-formation.
On Monday, the Joint Forum of Bharat Sanchar Nigam Ltd Unions and Executive Associations held rallies across all major cities to protest the IPO proposal.
BSNL is India’s largest telecom company in terms of revenues and sub-scriber numbers. The PSU, which has over 81 million customers (fixed-line and mobile), had revenues of Rs 39,750 crore in 2006-07, with a net profit of Rs 7,805 crore. BSNL has said it will invest about Rs 15,000 crore this fiscal to expand its mobile and broadband net-works across the country. It has also committed Rs 60,000 crore to ex-pand its telecom infrastructure and operations by 2010.
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