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where's the level playing field?

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BSNL has prime real estate, access to the best spectrum, has been guaranteed priority spectrum for 3G, and by virtue of its state-owned status, will always have a line of sight into spectrum.

Apparently, you can never possibly have a level playing field as long as government player is also in the picture. Is that a satisfactory scenario?

Reproducing the text of the article by Shalini Singh, which appeared in the TOI on 9th Aug, under the caption "BSNL unions question IPO valuation"

BSNL’s proposed dilution of 10% equity through an initial public offering (IPO) has run into trouble as its unions are raising questions over valuation of the offer.

"By management’s own admission, merchant bankers have not been appointed for the IPO, so how has the price been established and announced", union members question.

BSNL’s unions, India’s largest after the Indian Railways, have rejected the idea of an IPO, despite telecom minister A Raja’s offer of 500 shares at Rs 10 each for each of its 3.5 lakh employees, with an expected share price band of Rs 300-400. "Declaring a price range without the requisite due diligence or engagement with merchant bankers is a reckless move", said V A N Namboodiri, general secretary, BSNL employees union. "This low share price is extremely damaging for BSNL and should invite the regulator’s scrutiny", he says.


With a mobile subscriber base of 40 million and a fixed line base of nearly 32 million, BSNL should logically be valued multiple times higher than its private sector competitors Bharti, Vodafone and Reliance. BSNL has prime real estate, access to the best spectrum, has been guaranteed priority spectrum for 3G, and by virtue of its state-owned status, will always have a line of sight into spectrum. All these are serious upsides for a far stronger valuation, say industry analysts.

Namboodiri points out that no private sector company would announce an IPO in this manner. "The logical route for any company looking to raise funds is to restructure its operations to create maximum shareholder value and appoint merchant bankers before going to the market", he says.

Unions are also opposed to an IPO since its benefits to BSNL and its employees itself are questionable. "Arguments that an IPO will bring transparency or improve stock market sentiment are bogus. It implies that the current leadership is not transparent", said Namboodiri.

Muralidhar Rao

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amaku's picture

What level playing field!!

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Murali,

As I've said many times before competing with the government is an excercise in futility. If this IPO ever goes through, there are only one two possible outcomes:

1. If the private players have the clout, they will force the govt. to fully divest from BSNL which will either result in the slow demise of BSNL or massive layoffs to stay competitive.

2. The private players will die a slow death because they will never have a chance to compete.

You know what I'd prefer.

--amaku

murali772's picture

DD's comedy show

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Another instance of the raw deal the public gets when a government agency is a privileged service provider.

Television could have been the best thing to happen to India during the Olympic Games in Beijing; instead, it has turned out to be the worst. Blame it on Doordarshan. Analyse this: X, a high-profile athlete, wins a gold with a record-breaking performance. DD airs an ad, then cuts to the studio. The anchors, caught off guard, repeat for the nth time that X has won a gold medal before announcing: 'over to Beijing'. But there’s no sight of Beijing as DD airs another ad. And then it’s back to the studio.

The anchors of DD, seemingly a TV house by default, spout banalities and clichés in two languages. And the customised commentary is boisterous, manufactured and utterly intolerable. Given the in-depth knowledge of its wiseheads, Saina (badminton player) was always Sania (tennis player).

Viewers have no idea of what is, or what will be, telecast. And with no consistency in programming or scheduling of commercial breaks, one feels DD doesn’t have a clue either. Mostly maddening and, sometimes, quite inexplicable, that’s what DD’s coverage of the Olympics is like.

This is all because DD has exclusive rights to telecast the Games. Those rights stem from the 1995 Supreme Court ruling that airwaves constitute public property and must be utilised for advancing the public good. Well, if this is for the public good, then the feedback hasn’t been great: its Olympics coverage has peaked at six million viewers - just 7.5 per cent of the 82 million cable and satellite homes in the country. Wouldn’t it be interesting if there were some competition between channels, just as there is competition out there on the field? For more, click on
http://www.newindpress.co...

Muralidhar Rao

Muralidhar Rao
murali772's picture

Prescription for BSNL's ailment

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When a telecom revolution is on, with India one of the global stars in this regard, an entity which had 100 per cent of the market when this epochal process began, finds itself with a market share of 12 per cent and falling. And, paralysed when it comes to basic decisions on how to respond: the two-year controversy on its 93-million-line contract is one example. The Pitroda panel has clear recommendations on getting out of this mess and while they sound outrageous to staff unions, will sound worth doing to citizens.

The panel wants the communications ministry to appoint a person from outside the government as chairman, restructure the top hierarchy, have the ministry interact with BSNL only through the board meetings, have three-year target-based contracts for all key employee positions, induct young talent, a separate subsidiary to develop and monetise its huge and wasted land assets, lease its equipment, with performance contracts instead of buying through mammoth tenders and much more. To ensure continuous performance, it says the government can keep its majority stake, but should divest 30 per cent through either a strategic investor or a public partner. There is much more, but given the state to which BSNL has reduced to, it all seems worth trying.  

Many politicians and staffers will now seek to destroy or dilute these; the Indian public will be the big loser. For the full report in the New Indian Express, click here

This applies to most PSU's

Muralidhar Rao

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