DoT proposes to put BSNL's IPO plan on hold by up064b28

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									DoT proposes to put BSNL's IPO plan on hold
Wants restructuring completed first.




Thomas K. Thomas, New Delhi, April 15

The Department of Telecom proposes to put off plans to list Bharat Sanchar Nigam Ltd till the
restructuring of the company is completed.

A committee headed by Mr Sam Pitroda, advisor to the Prime Minister, had suggested a 15-
point restructuring plan to turn around the fortunes of the public sector unit.

BSNL is expected to report first-time losses of over Rs 2,000 crore this fiscal.

In a note prepared for the Telecom Commission, the Department of Telecom has stated that
the proposal to go for an initial public offering should be put on hold till fundamental changes
recommended by the Pitroda panel, including restructuring the company's board and
absorption of Indian Telecom Service officers, are implemented. DoT reckons that BSNL's
enterprise value will increase after the changes and a divestment at that stage would result in
higher revenues for the Government.

While BSNL management had proposed to divest 10 per cent stake through an IPO, the
Pitroda panel has suggested divesting 30 per cent in the PSU after the restructuring.

On the panel's suggestion to hive off BSNL's real estate into a land bank, DoT has already
undertaken an exercise for retention of certain assets for its field units. The balance is being
transferred to BSNL by signing a transfer agreement. BSNL management had agreed to most
of the suggestions made by the panel.
Major suggestion included adopting an outsourcing model through managed services for its
operations relating to call centre, IT and network, appointing an eminent person from the
private sector as Chairman, who will be supported by best professionals selected from the
market at market rates, reducing workforce by one lakh employees, spinning off the tower
infrastructure into a new subsidiary to unlock the value through a strategic sale or separate
IPO.

								
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