MTNL and BSNL deny being part of Zain deal

MTNL and BSNL issued clarification regarding news items reported on Sept. 8 and Sept. 9 that a Consortium made up of India’s Vavasi Group, regional telecom companies BSNL and MTNL and a Malaysian investor will buy a 46% stake in Kuwaiti telecom firm Zain. The state-run telecom companies clarified that no view has been taken regarding participation in the said consortium as has been reported widely. "However, MTNL and BSNL are always on the look out to explore all types of overseas business opportunities to expand their operations," the statement from the Telecom Ministry said. Vavasi MD Farid Arifuddin said that the group had only initial discussions with BSNL and MTNL, regarding the consortium. Interestingly, the deal is yet to be confirmed by Zain’s top management.

Media reports had said that an Indo-Malaysian consortium is set to buy a 46% stake in Kuwait’s Zain for US$13.7bn. Bard al-Khorafi, whose Khorafi Group holds 20% in Kuwait’s largest phone company, announced at a news conference that they, along with other shareholders, were selling 46% of Zain to a consortium made of Malaysia’s al-Bukhari Group, BSNL, MTNL and an Indian group called Vavasi. In a statement to Kuwait stock exchange, a Khorafi-controlled company National Investments said that BSNL and MTNL were part of a consortium that would pay 2 Kuwaiti dinars a share for the stake in Zain, West Asia’s third-largest telecom operator.

BSNL IPO - again - coming soon ?

BSNL will approach the government next week to carry forward the plan for divesting 10% equity through initial public offer.

BSNL chairman & MD Kuldeep Goyal said that to resume the formal dialogue with the opposing employee unions and to start the standard process like appointment of an investment banker, BSNL needs approval from the government which is still to come.

Recently, telecom minister A Raja who had earlier initiated talks with the union in his previous stint at the ministry asked the BSNL management to hold dialogue with the employees.

BSNL employees union is opposing the listing saying it is not in the interest of the company.

The new UPA regime is keen on BSNL`s listing and hopes that a 10% stake dilution in the company will fetch over Rs 400 billion.

Govt may not merge MTNL and BSNL: A Raja

Telecommunications and IT Minister A. Raja ruled out a merger of Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), saying that there are a lot of legal hurdles against the proposed move. Publicly listed MTNL provides telecom services in New Delhi and Mumbai, while BSNL serves the rest of India. Raja said that the Government would consider the listing of BSNL as proposed by the state-run company's Board. He however said that the company's union will also be involved in talks for the same. Estimates suggest that BSNL is worth US$100bn and dilution of 10% stake would help the company raise US$10bn. Raja also said that he would push for an extension of tax sops under Sections 10(A) and 10(B) of the of the Software Technology Parks of India Act for at least another two years. The sops, which were due to lapse in the current financial year, have already been extended by one year.

BSNL to launch 3G in 12 cities

By the 27th of this month, mobile telephony will enter its third generation (3G) in 12 cities in India, courtesy the state owned telecom
service provider BSNL.

Union minister for communication and IT A Raja launched BSNL's 3G services pan India, from Chennai, on Sunday, by making the first video call to TN chief minister M Karunanidhi.

The PSU was awarded one block of 2*5 MHz 3G spectrum in all telecom circles in the country, six months before, without participating in the auction, at a price equal to the winning bids in the respective circles, in the auctions to be held before March 31st.

"Considering the need for faster penetration of 3G, and the need for telecom access to rual areas, the Government policy will allow telecom infrastructure sharing between commercial telcos as well as infrastructure providers," Mr.Raja said. DoT also plans enable mobile number portability (MNP) in major cities by August, and in other towns by end of this year. Bids have been invited of providing MNP switches.

On the occasion, BSNL also launched its India Golden 50 tariff scheme, where, by increasing the pulse duration for all calls to 120 s, the tariffs have been have been reduced by 50-80%. Presently, a pulse is calculated at 90 s for national calls to other networks and 60 s within network.

"Besides upgrading mobile data speeds to 2 mbps from the present 144 kbps, we will also offer video screening of calls, video on demand, mobile surveillance, Live TV, movie downloads etc on our 3G platform," BSNL CMD Kuldeep Goyal said. For this, the company will scale up tie-ups with its existing content providers. However, the telco will not be providing its previously launched IPTV service, which has garnered 5000 subscribers, on 3G.

"We plan to operate 5 million lines spanning all district headquarters and important towns by end of this year at an investment of Rs.2700 crore," Mr Goyal said. "We expect 5% of our 2G subscribers to migrate to 3G." The company expects a revenue addition of Rs 500-1000 crore by this customer addition, and a 20% revenue augmentation by infrastructure sharing.

BSNL has tied up with Nokia, Sony and Samsung for handset bundling, the cheapest of which is priced at Rs.7000. Voice tariff schemes begin from a fixed monthly charge of Rs.350 for prepaid, and Rs 500 for postpaid. Data subscriptions are available starting Rs 250. The company has tied up with Micromax and Huawei for offering laptop data cards at prices ranging form Rs 3800 to 6000. "Trials are on to launch mobile banking on our 2G and 3G platforms," Mr Goyal said.

Govt woos BSNL staff with ESOPs

With the Left parties out of the way and stability no longer an issue, the Government has gradually started the reforms process. Among the first signs of this came this week after the NHPC filed a revised DRHP with capital market regulator SEBI and Telecom Minister made attempts at pacifying BSNL employees for the mega IPO of the telecom behemoth.

Coming to the BSNL IPO, the Government asked BSNL and its employee unions to carry forward healthy discussions on the proposed IPO. Telecom Minister Thiru A. Raja met representative of the unions and BSNL officials to discuss the matter. Raja said BSNL employees will get 500 shares of Rs10 each, translating into a net gain of about Rs1.5 lakh.

The offer was made in exchange for the unions dropping their opposition to BSNL's IPO. However, the unions rejected the offer. The joint forum of the BSNL unions, the umbrella body for all employee unions of the PSU, said this was a ploy to divide the employees. The BSNL board has cleared the proposal to sell up to 10% stake in the company. The company's employees have forced the PSU to put off IPO plans twice in the past.

NHPC plans to hit the capital market next month. It plans to sell 1.67bn shares of Rs10 each. The shares would be offered at a premium through a 100% book building process. The IPO would comprise 10% fresh equity and 5% disinvestment of government stake. Last year, NHPC had filed DRHP but SEBI rejected the same as the company did not have the required strength of independent directors.

BSNL IPO - again ?

India is hoping to list state-run telecoms firm Bharat Sanchar Nigam Ltd (BSNL) at Rs 300-400 (USD 7.2-9.5) a share, but will take a final decision only after discussions with trade unions who oppose the move, Telecoms Minister Andimuthu Raja said on Thursday.

BSNL is India's top ranked telecoms firm by subscriber numbers but in mobile services lags Bharti Airtel Ltd, Reliance Communications Ltd and Vodafone-controlled Vodafone Essar.

As of end-June, BSNL had nearly 73 million wireless and fixed-line subscribers, slightly ahead of mobile services leader Bharti Airtel which had nearly 72 million users.

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The Communication and IT Minister’s plans for getting Bharat Sanchar Nigam Ltd listed on the bourses may go awry, with the employees union threatening to go on an indefinite strike from February 26 to protest the stake sale.

The issue has also taken political contours with the Communist Party of India (Marxist) saying that selling stakes in profit making companies is against the Common Minimum Programme of the UPA Government.

Top BSNL officials said that there could be a rethink on the proposal given the severe opposition. “The Department of Telecom will review the proposal. It will be difficult to push through the stake sale given the opposition from the company employees. We don’t expect it to happen very soon.”

On Monday, the Communications Minister, Mr A. Raja, had revealed that an initial public offering by BSNL was being considered. As per the plan, which was announced by BSNL officers at a press conference, about 10 per cent stake in the company is to be offloaded to raise about $10 billion.
‘Protest unnecessary’

Senior DoT officials, however, said that the protest was unnecessary as the Government had never said that it had decided to disinvest stake in BSNL. “It is only at a proposal stage and it has been categorically said that a final decision will be taken by DoT after weighing all the issues, including concerns of the employees,” said a DoT official.

The BSNL employees union said that it will issue a notice to the Government on January 24 declaring its intent to go on an indefinite strike. “The Government is playing into the hands of the private sector by considering such a move. This is an issue that we are not prepared to agree, come what may,” said Mr V.A.N. Namboodiri, Convenor, BSNL Union Joint Forum.
CPI (M) opposed

Meanwhile, the CPI (M) Polit Bureau issued a statement which said, “CPI (M) strongly opposes the proposal for its disinvestment. It calls upon the UPA Government to desist from such a move, which will be detrimental to BSNL and public interest.”


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BSNL IPO - coming soon ?

In what could be the mother of all IPOs, public sector BSNL, India’s largest telecoms company, is looking at divesting about 20% within the next 12 months. The catch is the plan can take off only if the government were to approve the plan.

Sources said BSNL, which has over 65 million users, could be valued at close to $100 billion, which puts a 20% stake dilution at $20 billion — the largest that the country has witnessed so far.

It must be pointed out that this is not the first time that BSNL is planning an IPO. Its earlier requests for listing have all been turned down by the government. BSNL had put its IPO plans on the back burner after former communications minister Dayanidhi Maran had rejected the proposal last year.

This time around, BSNL executives expressed more confidence and are of the view that the present communications and IT minister A Raja may not be against the proposal. BSNL is yet to present the idea of listing to Mr Raja.

If the communications ministry were to approve the proposal, BSNL will undertake a process for cleaning up its books and also appoint an advisor to for the IPO within the next couple of months. It must also be pointed out that sister company MTNL, which offers services in both Delhi and Mumbai, is a listed company.

BSNL partially destroyed - Raja 1 BSNL 0

The deal will be limited to 2G lines only.

The board of state-owned Bharat Sanchar Nigam Ltd (BSNL) is learnt to have halved its 45.5 million line GSM order and decided to renegotiate the price with Ericsson and Nokia — the two equipment manufacturers who had earlier qualified for the order based on their price bids.

The marathon meeting of the BSNL board on Monday in Delhi, which lasted over three hours, is also believed to have come to a consensus that the order will be limited to second-generation (2G) lines and a separate tender for third-generation (3G) lines, which offer high-speed Internet access, will be floated later.

The decision to overturn the earlier order, which was a combination of 2G and 3G lines, falls in line with Communications Minister A Raja’s letter to the board that the current tender be restricted to only 2G lines, considering that the 3G policy has not been finalised.

“Keeping in mind the minister’s suggestions and BSNL’s interests, we have taken some decisions that will be conveyed to Raja,” BSNL Chairman and Managing Director AK Sinha said after the meeting, refusing to discuss details.

However, sources said at least one senior BSNL official was of the view that the order should be divided with 17.5 million 2G lines and 5.5 3G lines.

But that was overruled as the two representatives from the department of telecommunications contended that the new order should be limited to 2G lines.

Sources said the board, which decided against any financial rebidding, hoped to complete the award in the next few days.

A three-member committee, set up by the board to find ways to resolve the controversial awarding of the contract, submitted its report to the board today.

The controversial BSNL equipment order came under a cloud after Raja questioned the deal, saying the price of $108 per line quoted by Ericsson was too high and that he wanted an investigation into why Motorola and Zte were disqualified from the tender (they were disqualified on technical grounds).

Motorola had gone to court opposing its rejection but had withdrawn the case later.

BSNL could have gone for a rebid of the equipment deal but that would have attracted the ire of the company’s powerful staff association, which had threatened an indefinite strike if the government delayed the award of the contract.

Last week, the staff association struck work for a day, protesting the delay. BSNL employees have been complaining that the company will lose market share to private competitors if the contract was delayed any further.

Don't destroy BSNL

Calls for inquiry into "a sinister campaign" by 'vested interests'.

Dayanidhi Maran, who was forced by DMK to quit the communications ministry, today struck back by asking Prime Minister Manmohan Singh to inquire into attempts by an NRI businessman and other vested interests to stall the tendering process of Bharat Sanchar Nigam Limited.

The letter sent by the Lok Sabha MP to the PM earlier today, seeks to find out the truth regarding “the false propaganda being carried out to tarnish my name, plant doubts in the minds of the public regarding my integrity and the ulterior motive to destroy BSNL”.

Maran’s letter, his first public comment after his ouster from the ministry, is sure to create complications for his successor A Raja, who has been pushing for a review of BSNL’s mammoth 45 million GSM connections order on the grounds that the company is overpaying by as much as Rs 10,000 crore.

The two-page letter, without naming either Raja or the NRI businessman, goes on to say that “a sinister campaign is being carried out systematically against me through the media by certain vested interests.

As a minister, it was always my practice to stay out of the tendering process of not only BSNL but also MTNL. The tender, in question, was finalised only by the BSNL board”.

Maran alleged that the NRI businessman, in trying to stall BSNL’s growth, was facilitating the undue growth of private operators.

Although news of Maran’s letter broke in the evening, Raja had earlier during the day told reporters in Chennai that he would resign if the BSNL employee union’s allegations that his actions were hurting the company were proved.

“Unions owing allegiance to the Left parties have misunderstood me on the issue. I want to know if my actions had affected BSNL. Did I cancel the tender? I only asked them to revise the financial bid, which will save a lot of money,” he said.

It remains to be seen as to what view the prime minister takes on Maran’s letter. The political consensus is that the letter is a vain effort and would only add to Maran’s isolation within his party.

The DMK is a powerful constituent of the UPA government and has made it clear that it will run the communications ministry without any interference.