By Sandeep Gurumurthi , CNBC-TV18

 

Telecom Minister A Raja has announced that the State-owned BSNL may go ahead with the IPO after discussions with the Trade Union. The IPO has been posed as more of a political issue than making business sense. Besides the nodal, Raja has also announced sweeteners for BSNL employees like providing Esops and allotting shares etc. So how will the Trade Union react to this and how is this going to dampen the whole issue?

 

On BSNL Trade Union:

 

We need to be a little guarded in our exuberance about the IPO - while the management is very keen to move ahead and the Bharat Sanchar Nigam Ltd (BSNL) board has cleared the IPO 10% dilution; the CFO also said that he expects it to happen by the end of this fiscal. But it is a decision that has to be taken by the government and A Raja is a member of the DMK, a party that wants to maintain close thighs with the Left Parties. It is not just about this government and the current political equations but even political equations, going forward it is very unlikely that this Minister and the government will move ahead with the IPO without the consent of the Union and that is almost certain.

 

Raja was asked if the government, post another few rounds of consultations; if the BSNL Union maintain their opposition to any kind of stake sale to any kind of an IPO, would he go ahead with an IPO? To which he said no, so that stand hasn't changed and that has been the stand for the last several months. The only forward movement is that the government wants to get the Union to the negotiating table and they have made an offer today which the Unions have rejected it. But going forward there could be some more offer, some more sweeteners and will the Union budge, is the big question that everyone needs to watch out for.

 

Is BSNL's IPO a political twist?

 

There is no denying the fact that both the government and Minister Raja believe that an IPO is in the interest of the company and even for the government as well because it will make - if the figures are doing the rounds and it will materialize as much as Rs 10,000 crore and that is whole lot of money. But it is a political decision; the Union is very strong, in fact this whole round of consultations has been triggered by an offensive from the Union. If one remembers the BSNL board cleared the stake sale, equity dilution of 10% through an IPO after that the Union threatened to go on strike, they didn't actually go ahead and they said that they will meet on August 8 and take a final call on whether we need to go for an indefinite strike. It was because of that the Union came to a negotiating table, so they have a lot of bargaining power and no matter how much the management wants to push ahead with the IPO unless the Unions are on board, it is unlikely that it will go through.