BSNL plans mega-IPO of Rs 40,000 crore

The issue is awaiting government clearance.

State-owned Bharat Sanchar Nigam Ltd (BSNL) is preparing for the country's largest initial public offering (IPO) of around $10 billion (Rs 40,000 crore) slated sometime next year.

The issue has been discussed by the board and is awaiting government clearance.

The plan is to divest 10 per cent through the IPO, which values India's largest telecom company at $100 billion (Rs 400,000 crore), which is larger than the combined market capitalisation of Bharti Airtel at $46 billion (Rs 183,283 crore) and Reliance Communications (RCom) at $41 billion (Rs 163,683 crore), respectively the second- and third- largest telecom companies. 
 

VITAL STATS
Revenues	Rs 39,715 crore*
Profit	Rs 7,805 crore*
No of subscribers	65.3 million
* 2006-07

The announcement comes a day before the $3 billion (Rs 11,500 crore) IPO by Reliance Power, owned by the Anil Dhirubhai Ambani Group, the largest initial share offering to date.

The plan that it might go public was announced by Communications Minister A Raja on the sidelines of a press conference at which BSNL announced an insurance cover for 33.7 million of its subscribers.

Added BSNL's Director (Finance) S D Saxena, "DoT asked the board about an IPO and we have given our views . Our main aim for the IPO is to benchmark the company against others. The money will be used for expansion."

Saxena said while the process might begin in two to three months, the issue would probably open a year down the line, subject to government approval.

The company's expansion plans were delayed following a controversy over an order for 45 million GSM mobile lines under former Communications Minister Dayanidhi Maran, who was replaced by A Raja last year.

Objections by equipment suppliers on the way the contract was awarded prompted Raja to reduce the order size to 22.5 million GSM lines only for second-generation (2G) services, which was awarded to Swedish group Ericsson.

BSNL is a pan-Indian telecom service provider, except for Mumbai and Delhi which is serviced by state-owned MTNL.

The company's 2006-07 revenue was Rs 39,715 crore and net profit Rs 7,805 crore. It has over 65.3 million customers, in both fixed-line and wireless subscribers.

Bharti Airtel has over 50 million subscribers, mostly in GSM mobile services. RCom has 40 million subscribers, mostly in CDMA mobile services.