BSNL IPO

Lately, BSNL had been planning to go public by making equity shares available to the public. It was planning to launch BSNL IPO. This was supposed to be a Rs 400,000 crore deal. Nevertheless, reports obtained recently suggest that currently the Government is not planning to go ahead with the same.
In terms of the total number of subscribers as well as revenues, BSNL or Bharat Sanchar Nigam Ltd., is the biggest telecom giant, which is owned by the state. Rs 39,750 crore was the revenue of BSNL during the period 2006-2007. The net profit recorded was Rs 7,805 crore. The company value (as of January 15th , 2008) was $100 billion plus.

Reports reveal that the telecom giant was contemplating offloading about 10% of its stake provided, it got the approval of the Government.

Launching IPO- A probability:
BSNL was planning to make its debut in offering shares to the public by means of an IPO or Initial public offer. If this was to materialize, it would have made this deal, the second biggest IPO, which would have a market capitalization of Rs 400,000 crore.
This market cap would be equivalent to the market cap, if all the six telecom operators(listed) are combined together. Reliance Power floated the biggest IPO. The IPO was supposed to be listed on stock exchanges in India. Listing on the NYSE or NASDAQ was also on the cards.
“No” to IPO in near future-says Government reports:
However, recent reports (as of 17th January, 2008) reveal that BSNL has changed its mind and does not intend to launch an IPO in the near future. Reports also suggested that the matter is still being considered and if it is fathomed beneficial for the company, necessary measures would be taken.
Chances of success, if the BSNL IPO is launched:
The following factors may work out to the advantage of BSNL, should the IPO materialize.
Presence of a cable network of optic fiber.
It has cash reserves amounting to Rs 40,000 crores.
It has a real estate, which is valued at Rs 40,000 crores.
The fundamentals of the company are very strong, with a customer base of 7.5 crore subscribers in the country.

Factors for failure should IPO be introduced:
However, there are certain factors as well, which may prove to be a lacuna.
As far as GSM numbers are concerned, BSNL is behind Vodafone and Airtel.
Since it is a PSU, it is governed by certain norms of the Government.
Clauses under “Universal Service Obligation” may prove to be a limiting factor.
BSNL ‘s absence from two of the biggest telecommunication markets of the country- Mumbai as well as Delhi.

If the BSNL IPO was launched, the money raised would have been used for building infrastructure as well as for improving its network.

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Last Updated on : 30th July 2013