Govt puts BSNL listing on hold

The government's plan to list state-run telecom major Bharat Sanchar Nigam Ltd  will be delayed due to the company's mounting losses and high payout for 3G spectrum.

The Department of Telecommunications is looking towards a healthy financial situation before going ahead with BSNL's planned initial public offering, a senior ministry official told Business Standard.

The unexpectedly high bid price of 3G spectrum, made it difficult for BSNL to recover the money estimated earlier, the official added. Moreover, the unions are still opposed to the IPO plan. Unless, the financial performance of BSNL improves, the department is unlikely to go ahead with the listing plans for the telecom PSU.

BSNL, for the first time since its inception 10 years ago, had posted losses of Rs 1,823 crore (Rs 18.23 billion) for 2009-10. Declining revenues primarily because of losses from its landline services and a higher wage bill – due to arrears that had to be paid on the Pay commission recommendations – saw the telco going into the red.

The company had recorded a profit of Rs 575 crore (Rs 5.75 billion) in 2008-09. The drastic reduction in rates with tough competition impacted the growth of the company. BSNL had paid Rs 10,186.58 crore (Rs101.87 billion) for acquiring 3G spectrum.

A year before the government conducted the auction for 3G spectrum for private players, state-run telecom firms - BSNL and MTNL - were allotted spectrum, but with a rider -- they had to match the price of the winning bids. BSNL had requested DoT to refund the 3G spectrum fees but the finance ministry turned down its demand.

BSNL's 3G mobile services have not done well and the company has managed to garner only a small subscriber base.

In a similar development, DoT in its reply to the public accounts committee on BSNL said, "The issue of listing (BSNL) will be taken after its performance improves and after obtaining the views of different stakeholders, like staff union and associations."

The Prime Minister's Office had constituted a committee headed by Sam Pitroda to suggest ways and means to improve the performance of BSNL.

The Pitroda panel had suggested 30 per cent disinvestment in phases, among other things. The disinvestment proposal was met with stiff opposition from the employees' unions and associations of BSNL. The government has been planning an IPO for BSNL since the last three years.

DoT has also constituted an internal committee headed by Member (Services) to look into the recommendations of the Pitroda panel. The case of granting Navratna status, under which cash-rich PSUs are given certain autonomy with regard to investments and other financial transactions, to BSNL will be considered after its listing.