BSNL IPO may happen in 2010-11: Disinvestment secy

The government has rapped state-owned Bharat Sanchar Nigam Ltd (BSNL) for poor financial performance and made a case for disinvestment through an initial public offer (IPO).

“I hope the BSNL IPO happens in the coming year (2010-11). I can’t say exactly when, but I certainly hope that it does happen, because BSNL does need to open up to public ownership, primarily with a view to strengthen its own management and its accountability,” Disinvestment Secretary Sunil Mitra told a private news channel.

The public sector unit (PSU) has been negotiating with the trade unions, which have been opposing any disinvestment. The unions say disinvestment or listing would serve no interest of people. The government had earlier proposed to divest 10 per cent stake.

“The company’s financials are doing pretty badly and it certainly shouldn’t be so because telecom, as you know, is one of the sectors that you have to be competitive and they (BSNL) have to pull up,” Mitra said. The government may announce a roadmap for disinvestment in PSUs through IPOs and follow-on public offer (FPOs) by March this year and BSNL could be one of the 60 PSUs identified by the government.

BSNL, which was eyeing a top slot in the mobile market at one point of time, is struggling to retain its fifth position in the market. The company is also in the process of adding to its Global System for Mobile Communications (GSM) capacity, at an investment of over Rs 35,000 crore. It had floated the tender nearly 18 months ago. Being a government-owned company, it has faced bureaucratic hurdles in placing orders with the lowest bidders. Disinvestment and listing are expected to help the PSU take decisions faster and compete with the private sector.