BSNL IPO on backburner again

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New Delhi, Jan 20 (UNI) The country's largest telecom company BSNL's proposed move for an IPO to raise Rs 40,000 crore through the dilution of its 10 per cent stake has once again been put on hold, with a belligerent union opposing the move.

The company's previous attempt to go for the IPO in 2005 did not go well as the former Telecom Minister Dayanidhi Maran was not in favour of such a step.

A similar flip-flop by the present Telecom Minister A Raja has meant that the issue of an IPO, which can equal the market cap of all six listed telecom operators in India put together, is ''now being internally discussed with various stakeholders,'' industry experts say.

''IPO for BSNL would be issued if considered appropriate,'' the Minister said.

However, if this is due to buckling under pressure of union who has threatened to go on strike is yet not clear.

BSNL's Director (Finance) S D Saxena said the state-run telecom firm plans to raise atleast about 10 billion dollars (Rs 40,000 crore) through its IPO.

Mr Saxena said the IPO is expected to come out in a year's time and the government may allow atleast 10 per cent dilution.

''Upto 10 per cent dilution will be made that will raise about 10 billion dollars (about Rs 40,000 crore),'' Mr Saxena said.

Ten billion dollars can be a good size to test the market that will set the benchmark for going global, he added.

At present, the telecom giant's market valuation is about 100 billion dollars, he added.

The IPO will take a year's time and the process will be initiated in 2-3 months, he said.

''The government will take the final call, as this is a state-owned company,'' Mr Saxena said.

Post-offer BSNL's price earning (PE) is expected to be 51.2 and players in industry have similar valuations. Reliance Communications is at 52.9 while Idea Cellular has 57.8, while GSM leader Bharti Airtel has 34.1.

BSNL has very strong fundamentals backed by 7.5 crore subscribers in India. In FY07, it earned Rs 7,805 crore on a topline of Rs 39,750 crore.

Other positives for BSNL is the fact that it has large-scale passive infrastructure, a pan-India optic fibre cable network, cash reserves of Rs 40,000 crore and prime real estate worth another Rs 40,000 crore.

The funds of the IPO is expected to be used for expansion of network and services.

''We have enough funds to fulfill immediate requirements but the funds will help us in our future expansion of network and services,'' Mr Saxena said.

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