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BSNL Lines Up Big-Bang IPO
Posted by Pradeep Sadanapalli | January 15, 2008 | 395 views
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Loading ...State-owned telco BSNL on Monday said it plans to launch the country’s biggest IPO to raise about Rs 40,000 crore (over $10 billion).
“The company is valued at well over $100 billion. We are looking at offloading up to 10% stake, subject to government approval,” BSNL’s directorfinance SK Saxena told reporters. Asked about the development, telecom minister A Raja said: “The government is considering it (an IPO). The department of telecom (DoT) will discuss the issue and take a final decision soon.”
BSNL has an equity base of Rs 5,000 crore, which translates to a shareholding structure of 500 crore shares at a face value of Rs 10 each. BSNL executives said this would not be a disinvestment, but a dilution of stake by the government through the issue of fresh shares. This is because the company’s authorised capital is less than that of its subscribed capital, officials explained.
The Anil Ambani-promoted Reliance Power has announced the largest public offer to raise funds from the Indian capital market till today, which is hitting the market this week. The company has said it would raise over Rs 11,000 crore from the market. BSNL is India’s largest telco by revenues and subscriber numbers. The PSU, which has over 75 million customers (fixedline and mobile), had revenues of Rs 39,750 crore in 2006-07, with net profit of Rs 7,805 crore.
BSNL plans Rs 15k cr expansion
BSNL has also announced that it will invest about Rs 15,000 crore this fiscal to expand its mobile and broadband networks across the country. BSNL is also committed to investing about Rs 60,000 crore by 2010 to expand its telecom infrastructure and operations.
If BSNL manages to raise Rs 40,000 crore by selling a 10% stake, it would value the company at an amazing Rs 4,00,000 crore (more than $100 billion). The market valuation of India’s largest private telecom operator — Bharti Airtel — is about $46 billion, followed by Reliance Communications which is valued at about $41 billion. Telecom stocks enjoy record valuations in India as the country, which offers the lowest cellular tariffs in the world, also boasts of the fastest-growing mobile market. India has registered average monthly adds of over 7.5 million for the last eight months even as analysts say this figure could touch the 10 million mark from Q2, 2008. From a little over 260 million telephone connections at present, it is projected that the country will have over 500 million telephone connections by 2010.
According to Mr Saxena, BSNL had ‘more than enough’ resources to fund its current expansion plans, which would be met through internal accruals. “An IPO will help increase our network across the country, especially in the rural areas where private operators have so far shied away from launching operations. A 10% dilution is good to test the markets,” he said. He, however, refused to give a time-frame for the listing of the company. He also confirmed that the DoT had already sought BSNL’s opinion on the matter. BSNL has not yet started the process of appointing investment bankers for the issue, but plans to do so soon, officials said.
Several analysts contacted by ETrefused to put a figure to BSNL’s valuation. Some, however, said in addition to its subscriber base, the PSU possessed large-scale passive infrastructure, including optic fibre cable networks across the country and also prime commercial real estate in all major towns, which would go a long way in jacking up its valuation.
This is not the first time that BSNL has said it’s planning an IPO. Its earlier requests for listing have all been turned down by the government. BSNL had put its IPO plans on the back burner after former communications minister Dayanidhi Maran had rejected a proposal last year.
Meanwhile, the PSU on Monday also announced free personal accidental insurance coverage of up to Rs 50,000 for its fixedline customers and post-paid mobile customers. The scheme is expected to benefit a large number of BSNL customers, especially those in rural India, who do not subscribe to any insurance policy.
SOURCES:
Economic Times
Topics: Stock Market, Business News |
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