State-owned telecom firm, BSNL could come out with an initial public offer within the next one year. The idea behind the stock market listing is not so much to raise capital, as to put a value to the company, reports CNBC-TV18.
It could well be the mother of all Indian IPOs, if it happens at all. Caution is warranted because this is not the first time that state-owned Bharat Sanchar Nigam is considering an IPO. A top company official said one could expect it over the next 6-12 months.
It has been learnt that 20% of equity might be on offer. The valuations border on the fantastic. A company finance official quoted a figure of USD 100 billion. That is almost double the value of Bharti Airtel, whose market cap is about USD 45 billion. And Anil Ambani-owned Reliance Communications is valued at USD 35 billion.
BSNL has a much wider network and boasts of 65 million subscribers. Many of them are fixedline customers, who run up higher phone bills on an average than mobile users. Over the last 6-8 months, BSNL's performance has been muted on account of capacity constraints, but it is trying to get the better of market leader Bharti Airtel.
According to Kuldip Goyal, CMD, BSNL, “In about two months from now, Ericsson’s supply of equipment will start after that we should also be easily hitting the two million figure." The company is in the process of cleaning up its books and is likely to appoint an advisor to the IPO soon.
The company's previous attempt at a stock market listing did not take off because the previous Telecom Minister, Dayanidhi Maran, was not in favour of it. But current Minister A Raja is said to be not averse. The idea behind the stock market flotation is to discover the value of the company, not so much to raise capital.
Source: Moneycontrol.com
Friday, November 23, 2007
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