BSNL IPO on hold as a result of financial woes

23 Sep 2010

Plans to launch an initial public offering (IPO) for Indian state-owned telco Bharat Sanchar Nigam Ltd (BSNL) are to be delayed as a result of the continued financial difficulties at the operator. The Business Standard is reporting that the Department of Telecommunications (DoT) will hold off on the listing following both the high payout for 3G spectrum and continued losses in the face of hyper-competition in the country’s wireless sector. As previously reported by CommsUpdate, in August 2010 BSNL reported its first ever yearly net loss in the ten years since its creation, posting a net loss of INR18.23 billion (USD390 million) for the twelve months ended 31 March 2010 – on the back of losses from its landline services and a higher wage bill. Further, having been allocated 3G spectrum prior to the auction that concluded in May 2010, BSNL had been told it would be required to match the winning bids for its circles of operation; as a result it paid around INR101 billion for its third generation frequencies. In addition to its financial troubles, it is also claimed that the opposition of BSNL unions to the IPO plans is also partly responsible for the delay.

In a reply to the public accounts committee regarding the matter, the DoT noted: ‘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.’