BSNL invites bids for advisor ahead of its IPO

Bharat Sanchar Nigam Limited has begun the process of appointing an advisor for its initial public offer by inviting bids from merchant bankers.

BSNL executives said many advisors including SBI Capital Markets were being considered for the proposal on IPO, but added that a final decision on the issue was yet to be taken.

The decision to launch an IPO was taken after the government's decision to sell a small share-holding in profitable and non-navratna public sector units.

The Cabinet has already decided to list the unlisted PSUs where the revenues are more than Rs 200 crore.

Conservative estimates value BSNL at around $20 billion. Though the exact percentage of equity divestment has not been announced yet, indications suggest it can be up to 10 per cent.

It is still not clear if BSNL will go for an IPO to expand its equity base, which will enable the government sell a part of its equity in the PSU.

The ICICI securities-led consortium has submitted its report, favoring acquisition of MTNL by BSNL and an IPO by the latter as the preferred option. During 2004-05, BSNL had registered a net profit of Rs 10,183 crore. The PSU expects to post a profit of around Rs 8,000-10,000 crore during 2005-06.