Bharat Sanchar Nigam Ltd, the state-owned telecom company, is planning the sixth-largest initial public offering (IPO) ever in the history of the world.
NEW DELHI/MUMBAI: Bharat Sanchar Nigam Ltd, the state-owned telecom company, is planning the sixth-largest initial public offering (IPO) ever in the history of the world. It intends to garner as much as $10 billion, or Rs40,000 crore, by selling a 10% stake, finance director SD Saxena said in New Delhi on Monday.
The largest ever IPO in the world was floated by Chinese banking giant ICBC last year, which mopped up $19.1 billion (Rs75,000 crore at current exchange rates). The issue had seen unbelievable subscription. The second-largest happened nearly 10 years ago, when Japan’s No 1 telecom company, NTT DoCoMo, floated shares worth $18.4 billion in 1998.
At the proposed price, BSNL will have a market valuation of $100 billion, or around Rs400,000 crore, making it the second-most valuable company in India behind Reliance Industries, which is valued at Rs467,000 crore. That’s also nearly equal to the valuation of all the six listed telecom operators in India put together (Rs417,000 crore), and the second-most valuable in Asia after China Mobile, which has a market value of $344 billion.
While Bharti Airtel and Reliance Communications have market capitalisation of Rs172,000 crore and Rs166,000 crore, respectively, Idea Cellular’s stands at Rs36,895 crore, VSNL’s at Rs19,190 crore, MTNL’s at Rs11,888 crore, and Tata Tele’s at Rs10,829 crore. The issue would also be nearly four times the largest IPO in India to date — the Rs11,700 crore Reliance Power issue from the Anil Ambani group, which opens on Tuesday (today). Turn to back page, p24
Why go for such a big public issue? “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%.’’
Meaning, with only one out of five Indians owning a mobile, there are at least 40 crore Indians (leaving out the underage population) waiting to get connected.
With the average subscriber generating a business of Rs350 a month, here is a gigantic money machine. India is already the third-largest mobile phone market in the world after China and the US, with 225 million subscribers.
As of end of December, 2007, BSNL had the third-largest subscriber base of 32.7 million, with a market share of 19.03%.
Bharti Airtel is on top with 55.1 million GSM (Global System of Mobile Communications) users and a market share of 32.09%, followed by Vodafone Essar with 39.8 million and 23.19%. Reliance Communications is the second largest, but it uses a different technology, Code Division Multiple Access (CDMA).
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