India’s Demand for Telecom Growth Fuels Competition, $10 Billion IPO
By Mike Caggeso
Associate Editor
India’s biggest telecommunications company, state-owned Bharat Sanchar Nigam Ltd., or BSNL, plans to raise $10 billion in an initial public offering (IPO) sometime next year.
Such a price tag would make the IPO India’s largest ever, even though it would only amount to a 10% divestment of the company, currently valued at $100 billion. BSNL is larger than the combined total of India’s second-and third-largest telecom companies, Bharti Airtel ($46 billion) and Reliance Communications ($41 billion), the Business Standard reported.
The board has discussed the IPO and is awaiting government approval.
BSNL is no doubt trying to steal Reliance’s thunder, as its announcement came a day before Reliance’s own IPO today (Tuesday), which is expected to fetch $3 billion, a price that will be India’s largest IPO to date.
"Our main aim for the IPO is to benchmark the company against others," S.D. Saxena, BSNL’s director of finance, told the Standard. "The money will be used for expansion."
As for all telecom companies in India, there is plenty of room for expansion.
"The growth potential in India is huge," Sumit Modi, telecom analyst at Emkay Share and Stock Brokers Ltd., told Bloomberg. "The mobile penetration is just less than 20 percent."
And that demand treated Bharti Airtel and Reliance quite well in 2007, as both companies gained 58% on the Bombay Stock Exchange last year, Bloomberg reported.
News and Related Story Links:
- Business Standard:
BSNL plans mega-IPO of Rs 40,000 crore
