India - privatisation of BSNL

Government of India in Talks with BSNL Unions on IPO Plans

India has revived its plans to float state-owned telecoms operator BSNL; government officials have held talks to get trade unions to support the deal, Reuters reports. The government had said in January it aimed to list BSNL but put the plan was put on hold after opposition from its communist allies and trade unions. Earlier this week, the board of BSNL approved the IPO proposal and senior officials of the company were asked by Communications and Information Technology Minister A. Raja to hold talks with the employees’ unions, who fear a public flotation would mean job losses. As a sweetener, BSNL's 304,000 employees have been offered 500 shares each at 10 rupees (US$0.24) a share, while the IPO would be in a range of 300-400 rupees per share. However, the chief of the BSNL employees' union rejected the government's offer and said the opposition would continue. BSNL officials said they would continue their discussions with the unions and try to convince them about the IPO.

Significance: BSNL, which has fallen behind the leading private operators in adding new mobile customers, would benefit from a listing. Putting the company into the public domain could result in more transparency, better resource management and business negotiations in the competitive environment. However, opposition from the employees' unions and the current financial-market turmoil may further delay the IPO plan.