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Aug 08, 2008, 12.43 PM IST | Source: CNBC-TV18

Plan BSNL IPO price at Rs 300-400/sh: A Raja

The Telecom Minister, A Raja has requested the BSNL Trade Unions to have healthy discussions on the impending BSNL IPO. Raja said that the listing would be beneficial for the State-owned BSNL. He assured that BSNL employees to be given shares in the IPO. Each BSNL employee would get 500 shares at Rs 10 each, listed at Rs 300-400 per share.

D Raja , Telecom Minister

Telecom Minister , A Raja has requested the BSNL Trade Unions to have healthy discussions on the impending BSNL IPO. Raja said that the listing would be beneficial for the state-owned BSNL. He assured that BSNL employees will be given shares in the IPO. Each BSNL employee would get 500 shares at Rs 10 each, listed at Rs 300-400 per share.   

There is no time-frame fixed for the BSNL IPO, Raja said.

Excerpts from the press conference:

"Today I added one slot of 3G spectrum in 2.1 GHz band to BSNL. This is the first time I took a decision since the BSNL fighting in remote and rural areas, under which the rural masses are being connected to the mainstream - all landline rural connections are being exempted right from today from the licences fee in terms of AGR, which may come to something Rs 600-800 crore. The Telecom Regulatory Authority Of India's or TRAI's recommendation said that access deficit charges or ADC coming for BSNL to the tune of Rs 2,000 crore must be stopped or terminated. So trade unions agitated that Rs 2,000 crore must be reimbursed through other means. I decided since BSNL is having some social obligations for the rural people and remote areas, where the operators are having no business, the amount which is going to be incurred as loss - this Rs 2,000 crore must be compensated through other means. So ADC of Rs 2,000 crore due to BSNL to be compensated via USO fund (Universal Service Obligation Fund).        

So, BSNL is going to get two benefits today. One, the rural landline license fee is being exempted, which may come to Rs 750 crore and ADC charges, which were terminated by TRAI, Rs 2,000 crore and which will be compensated through USO fund. So four major decisions I wanted to disclose and share with the BSNL trade unions. Apart from that since a decision was taken with the BSNL board that the company could be listed, the talks over the IPO and listing the company came into existence during the discussions. BSNL Chairman and other officers including the Secretary of Telecom explained in what way the IPO will benefit the company including putting all company accounts in the public domain and in order to maintain transparency and accountability with more resource management to the international community to know about the BSNL. It may help the PSU.

On the contrary trade unions expressed their apprehensions that the development of the company cannot be exclusively measured in terms of IPO. Even without an IPO, it can be managed in a better manner. Still they are having their own apprehensions that the working community may suffer by listing the company."

"Still they are having their own apprehensions; the working community may be suffered by listing the company. The BSNL Chairman, Secretary and the other officers explained the situation in what way listing the company will give a boost to the company business and in what way the BSNL employees will get employee-stock option or ESOP at liberal and concessional rates and will get ownership right in the company. So the ownership right is contemplated by giving shares to the workers which may give social and economic security in their career. So all these issues were discussed and I requested the trade unions that the IPO shouldn’t be treated either as a cult or as a dogma.

A healthy discussion can be held in the near future and some rounds of talks individually and collectively with the trade unions will be done in the course of time and after that the government can come to a conclusion as to what decision we can take."

Q: The decisions will be taken only if the unions agree?

A: We will discuss with the unions before taking any decisions.

Q: When are you discussing with them again?

A: That will be decided by the BSNL Chairman.

Q: How many meetings are you supposed to have?

A: I insisted them to have a discussion, only a discussion will not give any final verdict. That doesn’t mean that the final decision is going to be taken in the discussion itself. You shouldn’t close the door for the discussions, healthy discussions, pros and cons must be taken into account and thereafter the government will take decisions.

Q: Any time frame for this?

A: No time frame is fixed. I directed the Chairman and the trade unions will meet collectively and individually because we cannot have a collective decision with CPI or CPM unions as some unions will have a difference of opinion and even that may be taken into consideration and thereafter the collective decision can be taken.

Q: Do you see the BSNL IPO happening within the tenure of this government? And if you could tell us what is the extract to the unions, the kind of ESOPs that will be given to them, so what is roughly the format?

A: Today also we gave another offer. Each employee gets 500 shares at Rs 10 each. The BSNL Chairman offered that package today, and and get it listed at Rs 300 to Rs 400 and each employee will get Rs 1.5 lakh to Rs 2 lakh.

Q: What is the overall valuation of dilution?

A: That can’t be assessed now, this discussion is going on, this is all among the package offer that is extended by the BSNL Chairman, you consider these new packages also plus whatever your apprehension remains regards to social and employment security can be addressed in a proper manner. So we gave some time, we have discussed, but I cannot give any time frame.

Q:  Will this IPO also be a part of the disinvestment process for the government; would you also like to have a broader political consensus on the issue?

A:  Once we have given to the trade union, some sort of consensus has arrived then we can have the political idea.

Meanwhile, speaking to CNBC-TV18’s Sandeep Gurumurthi, VAN Namboodiri, Trade Union Leader, BSNL said, “As far as we are concerned, our line is very clear. We have opposed it in tooth and nail, and any offer of 500 shares is not going to change it. Our workers very well know that it is only a bid for an approval of the IPO. We are not prepared to accept that proposal and even if it is something better we are not going to accept.”

Excerpts from CNBC-TV18’s exclusive interview with VAN Namboodiri:

Q: An offer was made today to the union in the meeting with the Telecom Minister Mr. Raja - you have rejected it, could you give us more details?

A: The discussion actually was regarding the efficiency of the services and we are told that we are completely for the efficiency of the services. Between that, there is a proposal of the IPO that we have already rejected. We have passed a resolution and that was given to the Minister that we are completely opposed to the IPO at BSNL.

We told them that there is no necessity for the IPO because the company is good and it is working properly and even otherwise in principle we are opposed to the IPO because IPO disinvestment and privatization.

Q: What about the offer that was made specifically today 500 shares to each employee, a range was given in terms of valuations as well, and each employee could be making well over a lakh, do you expect that they would come back with a better offer and you think there would be any rethink or you are clear that the entire union and we understand the union of over a lakh employees will oppose the IPO?

A: As far as we are concerned, our line is very clear. We have opposed it in tooth and nail, and any offer of 500 shares is not going to change it. Our workers very well know that it is only a bid for an approval of the IPO. We are not prepared to accept that proposal and even if it is something better we are not going to accept.

Q: Do you anticipate the government to move ahead with the IPO despite your reservations; the Minister indicated that he wants to get you on the Board and you would like to move ahead with the IPO only if the unions are on board but do you anticipate a possibility of the government having consultations with you but then saying that its not working out but we still want to move ahead with the IPO, is that a possibility?

A: We don’t think that the government will take that move, because they know we are completely united and strong in our case and they also know that without our support this cannot be done and we hope that the government will not take and the minister has also assured that without consultation with the unions, no decision will be taken and we believe the Minister.

READ MORE ON  BSNL, A Raja , Telecom Minister,

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