BSNL IPO hits roadblock!

The much awaited $10 billion BSNL IPO has hit a road block before even taking-off. Communications minister A Raja's offer to give all the 3 lakh employees 500 shares at Rs 10 each has been rejected by the Union. This would have fetched each employee a minimum of Rs 1.5-2 lakh at the time of BSNL’s listing on the bourses.

If the share were to list somewhere between Rs300-400, it would give BSNL valuation of $37-45 billion which is way lower than $100 billion what the company has been claiming since January.According to analysts, the $37-45 billion valuation is a fair one. BSNL has about 81 million subscribers, 10 million more than the country’s largest private operator, Bharti Airtel, which is valued just over $38 billion. However, a top BSNL official said that this was only the book value of the company and did not include its asset value.

Read more in The Economic Times article.

BSNL plans mega-IPO of Rs 40,000 crore

State-owned Bharat Sanchar Nigam Ltd (BSNL) is preparing for the country’s largest initial public offering (IPO) of around $10 billion (Rs 40,000 crore) slated sometime next year.The issue has been discussed by the board and is awaiting government clearance.

The plan is to divest 10 per cent through the IPO, which values India's largest telecom company at $100 billion (Rs 400,000 crore), which is larger than the combined market capitalisation of Bharti Airtel at $46 billion (Rs 183,283 crore) and Reliance Communications (RCom) at $41 billion (Rs 163,683 crore), respectively the second- and third- largest telecom companies.

The plan that it might go public was announced by Communications Minister A Raja on the sidelines of a press conference at which BSNL announced an insurance cover for 33.7 million of its subscribers.

The announcement comes a day before the $3 billion (Rs 11,500 crore) IPO by Reliance Power, owned by the Anil Dhirubhai Ambani Group, the largest initial share offering to date.

Read more in The Business Standard article.

DoT rules out BSNL-MTNL merger

The Department of Telecom (DoT) has ruled out the possibility of merging the two PSUs - BSNL and MTNL - on the grounds that MTNL is listed entity.Telecom Minister A Raja was recently apprised by DoT officials of this decision which says MTNL has private stakeholders who may not favour a merger with BSNL, official sources said.

While the government has 100% ownership in BSNL, MTNL has 56.25% government stake. MTNL is listed in the domestic market as well as on the New York Stock Exchange.The merger plan was first floated by late communications minister Pramod Mahajan and it was revived later by former minister Dayanidhi Maran.MTNL has minority shareholders/ADR holders whose approval for the merger decision is crucial.

After I-Sec submitted its report, the government was exploring the financial pros and cons of a reverse merger of BSNL with MTNL to take care of the private shareholders' interests.

A merger mode would necessitate a mandatory delisting of MTNL for a subsequent relisting of the combined BSNL-MTNL entity which would have been a complicated process for DoT to handle.

Idea, Spice Tele may call off deal

Idea Cellular and Spice Telecom might call off their proposed merger talks. The two companies were unable to come to terms on the valuation, and also on the future structure of the management to run the merged entity.

According to a source close to the development, Spice Telecom will go ahead with its planned initial public offering (IPO).

“The deal seems to be off, at least for the moment. Valuation is believed to be key issue, while differences in sorting out of management and operational issues of the joint company also played a part,” the source told Business Standard today.

Spice Telecom, which has received approval from the Securities and Exchange Board of India, would go ahead with its Rs 600 crore IPO.

The combined entity would have had a market share of over 11 per cent in the mobile space. However, even after the merger, the company would remain the fifth largest mobile operator in the country-far behind Bharti, Hutch, BSNL, Reliance and Tata Teleservices.

Read more in The Business Standard article.