IPO In BSNL Information

BSNL may launch IPO next year
www.bsnlnewsbyashokhindocha.blogspot.com M-9426201999

State-owned telecom major Bharat Sanchar Nigam Limited (BSNL) may launch its initial public offer (IPO) by next year, its Chairman Kuldeep Goyal told CNBC-TV18 in an interview. “The company may launch an initial public offer (IPO) next year and is awaiting government approval,” he said.
Here is a verbatim transcript of an exclusive interview with Kuldeep Goyal on CNBC-TV18. Also watch the accompanying video.
Q: First one word on the kind of acquisition plans BSNL has had, there has been plenty of talk about how you are looking at considering Zain Telecom perhaps in combination of couple of other entities, is that on the table for BSNL?
A: We have a proposal which we are looking at. There is a proposal not directly from Zain but some other companies and we have not made up any conclusive thing on that, we are looking at it as of now.

Q: What would Zain offer to BSNL though by way of an asset that you acquire and will it be a combination of entities that will put in a bit, will it be BSNL, MTNL and Vavasi or will BSNL want to go it alone?
A: Zain offers a lot because they are in 70 markets, Africa and Middle East and there is a lot of potential for growth so definitely it is a very good proposal to look at. This being a very large value deal naturally it will be in combination with the others. We are already talking about MTNL and not only Vavasi there could be some other partner also to see that everyone has manageable share to put in.
Q: What is your own estimate of the kind of values telecom holds and how soon would you make up your mind whether or not to put in a bit?
A: We have not done any due diligence so fast so it maybe difficult to put a value as of now. The earlier deal which did not go through, there was some valuation done and the one which has been talked of sometime back where it was announced in Kuwait in the press. So there are wide variations between these valuations and one has to look at what exactly emerges after due diligence so we can say something after it is really worked out.
Q: We understand you do have plans to outsource your management and maintenance of your infra businesses as well, can you tell us what is the rationale behind this particular plan and what is the kind of cost saving if any that you will incur?
A: Actually we are looking at various things, we are sharing our infrastructure and we are also trying to outsource the management if it improves the network performance because right now we have been doing everything on our own. Looking at the models which are there now and which have been very successful, outsourcing of the infrastructure is one model which we are looking at. We have recently started sharing; we have two deals already one with Aircel and one with Tata Telecom where we have made our infrastructure available do them and now we are looking to improve the SLAs (service level agreement) for our customers and therefore that has to be looked at and I think we should be seeing that after some time
Q: There are also reports that say that BSNL IPO may happen early next year; could you give us an update on that?
A: Now the decision has to be taken by the government as to when and how it should be done. BSNL Board had already passed a resolution where it recommended to the government for an IPO and government looking at various factors, various public sector undertakings (PSU) which have to be listed etc. will have to a take a decision which could be early next year, although it is difficult to say but that could be the time frame.


Q: The government stand is that this cannot happen without employee consent- have you and the trade unions reached any common ground on differences that exist?
A: There have been some dialogues with the employees with their executives and non-executives of and on, there has not been agreement on that. But once a decision is taken and we talk to them in details, I think we should be able to carry them with us.
Q: Any detail on how exactly the government is keen on going about this process of listing BSNL. Will it be fresh shares that would be issued in the equity market or will the government itself look at pairing its stake down?
A: It could be some disinvestment and some public share issue. It is not really very firmed up. We have not had from government any official communication on that but I understand that they considering some issue of existing equity to the public and also disinvesting some to some of the organizations, institutions, it is not really firmed up as of now I think.
Q: On 3G – could you give us what the response is being like and what is the kind of outflow that you expect and how this would be impacting your revenues as well?
A: We have already launched 3G in 180 cities and we have some 62,000 customers working on it. Initially when we started with 11 cities in end February this year we had only partial coverage of those cities which now we have been gradually improving and many cities we have full coverage. We have also added services on this 3G. When we initially started we had only video calling and high speed internet and mobile TV services. Subsequently we have added high speed video streaming, full stream music download, multiplayer gaming and services like that. There has been a good response. We find that the response is gradually improving initially customer additions were very few but last couple of months we find it has picked up a lot. So basically coverage getting increased and services being added then tariffs also we have made quite affordable. I have a lot of hope that this will pick up and should be a good revenue earning thing for us.
Q: BSNL has an extremely large equipment contract in the pipeline – have you decided who you will allocate it to and will ITI indeed be one of the contractors?
A: The equipment procurement for our mobile network expansion is being done; it is on a zonal basis. In four zones we have got different request for proposals (RFPs) which have been floated. The RFP for North-East and South zone is under finalization, negotiations with vendors are on. For the West zone right now there is no consideration but ITI could be because we have always been partnering with ITI in the West zone, and it could be one possibility but as of now we have not yet decided on the West zone. So the finalization of the equipment procurement is yet to happen on all the zones.
Q: How large is the contracts specifically for the west zone?
A: Put together in fact all the four zones, the equipment procurement was planned for 93 million, 25 million of lines in North, West and South zone and 18 million in East zone. I would not like to put a figure in terms of the value because the equipment is not in one. We have got four different parts of it, 2G, 3G, infrastructure and IT components and those are being evaluated but it is a large value tender, very large value no doubt. For the west zone again it could be 25 million lines but this is not to be procured in one go. This is again going to be in three different phases and depending upon the requirement of the equipment to that extent only procurement will be done. So to put a firm value on the total procurement may not be really appropriate at this moment.
Q: Could you put a number to the kind of savings that you would incur from these plans to out source these for management of infrastructure and do you have any more cost saving initiatives going forward? Do you have plans to reevaluate your CDMA based services?
A: As far as the cost saving is concerned by sharing of infrastructure we have made a beginning and we have already signed agreements with Aircel and Tata Telecom for sharing our tower infrastructure which will definitely reduce our opex (operation expenditure) on those tower infrastructure and by out sourcing that because right now we have lot of expenditure which is being incurred, we have spent almost Rs 11,000 crore (eleven thousand crore) on our operations and maintenance of our complete network. There could be a significant reduction if we can outsource that in a way that we can optimize the expenditure on those. Putting a firm value may not be possible but out of this Rs 11,000 crore, if it is properly managed through out sourcing model we could save a significant portion.
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