BSNL mulls IPO, 33% market share by 2010
The company willinvest Rs75,000 crore in the next four years in expansion
and for introducing services like IPTV
New Delhi: The top management
at state-owned Bharat Sanchar Nigam Ltd, or BSNL, India’s biggest phone company
by revenues, favours a listing of its shares through an initial public offering
(IPO) as a means to benchmark itself against private sector telcos, usher in
transparency into its operations and help it become more efficient.
“If a part of your equity is
listed, then everyone monitors your health,” Kuldeep Goyal, chairman and
managing director of BSNL, said in an interview. “From that angle, I feel there
is time to consider that (an IPO), but it depends on the government and
employees.”
Kuldeep Goyal,
chairman and managing director, Bharat Sanchar Nigam Ltd
BSNL, which counted about $3
billion, or nearly Rs11,800 crore, in cash flows last year, does not have a
pressing need to take the IPO route to help finance expansion yet. “They may
want to go public more for unlocking the value and also understand the kind of
value they generate in the industry,” said Naveen Kulkarni, telecom analyst at
Mumbai-based Religare Securities Ltd. “If they go public, their market
capitalization could easily be around $35 billion,” he added.
Bharti Airtel Ltd and Reliance
Communications Ltd, or RCom, India’s top two mobile phone service firms, enjoy
a market cap of $43.5 billion and $38 billion, respectively.
The New Delhi-based BSNL,
which has been losing market share in recent years to Bharti Airtel and RCom,
has put in place an ambitious plan to garner one-third of the Indian telecom
market by users in 2010, by when the fourth largest economy in Asia is
predicted to have some 500 million telephone customers.
“We will be investing Rs15,000
crore this year, and Rs20,000 crore each year for the next three years as we
expand our mobile networks and also introduce new services such as IPTV,” said
Goyal.
IPTV is short for Internet
protocol television, a technology that helps deliver television signals through
an Internet connection.
BSNL already accounts for more
than 25% of fixed line and mobile phones used in India, but nearly half of this
comes from its 33 million-strong fixed line phone customers—a base that is
slowly shrinking. All its growth in future then will have to come from mobile
phone customers.
India’s telecom regulator, the
Telecom Regulatory Authority of India, or Trai, said in October that BSNL’s
share of the fast growing mobile telephony market was around 17.24% by
subscriber numbers, while Bharti Airtel and RCom accounted for 23.9% and 17.3%,
respectively.
Home to more than 200 million
mobile phone customers, India is the fastest growing wireless market in the
world, adding up to eight million customers a month.
Analysts believe a public
listing would help BSNL garner more resources for the kind of growth its
management is aiming to achieve. “They are talking about adding three million
connections every month for the next three years, at a time when Bharti is adding
around two million every month,” said Yogesh Kirve, a telecom analyst at Anand
Rathi Securities Ltd. “A public listing will bring more accountability and
efficiency,” he added.
In what could further help
BSNL boost its share of the Indian mobile market, the company plans to
formalize plans to offer phone services through technology in a month’s time. CDMA (short for code division multiple access) “CDMA mobility would help us
penetrate areas where there is no GSM network, so it would help as a fallback
strategy,” said Goyal.
“Moreover, with CDMA, you do
not need to migrate to 3G for offering high speed data transfer, which is the
case if you are using GSM.”
BSNL currently offers mobile
services on the dominant GSM platform and uses CDMA in a limited way for
last-mile access, especially in rural areas.
To add another 100 million
connections by 2010, BSNL will need to work on a decision making process and
timely procurement of equipment for rolling out mobile and fixed line networks
in the country’s rural areas.
“BSNL has got around 30,000
towers and we would need to add around 25,000 to 30,000 towers within a year or
so, and probably keep adding the same number each year for a couple of years,”
said Goyal.
In order to become more
focused on its core competencies and shed non-core to float a separate areas of business, “BSNL is examining (a proposal) infrastructure company,
which will focus on establishing and maintaining telecom towers,” Goyal added.
Private sector rivals Bharti Airtel and RCom have already floated their tower
subsidiaries.
“All other players such as
Reliance have got good valuations for their tower companies, so we are
considering whether to have a separate company,” the chairman said. BSNL
Hiving off its tower business
could just be the beginning, with BSNL also looking to outsource more
activities to experts. “What we cannot do on our own should be outsourced,”
said Goyal. “We are reviewing if we should outsource more activities such as
maintenance of mobile networks and broadband connections,” he added.
Even as BSNL prepares to
increase its share of the wireless market, the company views growing landline
phone subscriber base as an effective strategy. “If you look at mobile calls,
60% of the traffic is within premises, and voice quality of landline would be
much better in these cases when compared to mobile voice quality,” said Goyal.
But for customers who are now
used to the benefits of phonebook and caller line identification, switching to
fixed line could still be a tough task. “With more facilities bundled with
fixed phones, cheaper call rates and better voice quality, I hope to attract
more people back to wire line connections,” Goyal said, adding that BSNL plans
to procure new fixed phones that come with a phonebook and other facilities.
What could aid fixed line
growth is the increasing penetration of broadband connections, which allow
customers to access the Internet at relatively higher speeds. “We believe
broadband will help turn it around, and we aim to have around 10 million
broadband connections by 2010,” said Goyal. The company currently has around
1.15 million broadband customers. The government has set a target of 20 million
broadband connections by 2010. In a bid to streamline BSNL’s operations with
state-run and New York Stock Exchange-listed Mahanagar Telephone Nigam Ltd, or
MTNL, “we would be signing an MoU (memorandum of understanding) with MTNL very
soon”, said Goyal, declining further detail. MTNL, which operates in Mumbai and
New Delhi, has around 2.7 million fixed line phone users, while BSNL has almost
31 million wireless customers.
Source: MINT
COAI files
affidavit against spectrum criteria
|
This
is in addition to the legal petition |
Our Bureau
Despite the Government’s
move to set up a new panel to review spectrum allocation criteria for mobile
operators, the Cellular Operators Association of India has filed another
affidavit in the Telecom Dispute Settlement Tribunal against the criteria suggested
by the Telecom Engineering Centre.
The TEC report had asked
the existing GSM operators to pack in up to 15 times more subscribers to be
eligible for additional spectrum. This in effect put out all the existing
operators out of contention for additional spectrum.
On Tuesday, the
Communication Ministry, which has accepted the TEC report, had set up a new
committee to review this norm in a bid to take the industry’s concerns on
board. Industry representatives from COAI have also been invited to be part of
the new panel.
New
affidavit
However, this move has
clearly not addressed the concerns of the existing GSM players. The new
affidavit from COAI is in addition to the appeal against the Government’s
decision to allow Reliance Communication to offer GSM-based services across the
country.
While Aircel
and Spice have distanced themselves from the legal proceedings, Bharti Airtel, Vodafone-Essar and Idea Cellular are
challenging the Government’s spectrum policy since they are the worst affected.
COAI has also questioned
the Government’s move to allocate spectrum to two telecom PSUs,
BSNL and MTNL, on the grounds that they have been given frequency out of turn
even as private players have been waiting to get spectrum for over a year. The
TDSAT is expected to take up the case on November 12.
Source: The Business Line
Telecom News dated 08-11-2007