FE Editorial BSNL, engaged

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The disinvestment of BSNL, opposed by the Left as long as they supported the UPA government, has run into a new hurdle: its own employees’ union, which represents 3,20,506 employees at the public sector telecom giant. The department of telecom has been trying to push a limited IPO to offload just 10% of the government’s equity in BSNL. The telecom minister tried to make the proposal more palatable to the union by offering employee stock options (Esops)—each employee is to get 500 shares at Rs 10 each. The share is expected to list at between Rs 300 and Rs 400, which would earn a handsome gain of Rs 1-2 lakh per employee. Unfortunately, the union is being irrationally stubborn by arguing that it opposes the IPO in principle, no matter what the gains to employees.

Things have now reached a dead end with the union unwilling to budge from its position. This will be most unfortunate. BSNL has an estimated 81 million subscribers, compared with 70 million subscribers of the next ranked Airtel. BSNL’s market capitalisation, at Rs 2,00,000 crore, will be the largest in the telecom sector. Bharti Airtel is second with Rs 1,65,071 crore. The opportunity the sale of BSNL affords for the government is huge. Even a 10% disinvestment will mean a revenue mop-up of Rs 20,000 crore, which is welcome for a government reeling under fiscal trouble. Incidentally, it will also be the biggest-ever IPO in the Indian corporate history. Attractive numbers apart, there are very good fundamental reasons to begin what should eventually be a complete disinvestment of BSNL. The government should not be spending time and money running telecom companies when the private sector has shown itself perfectly competent to do so. The government already looks after consumer interest through the regulator, Trai. Also, in a rapidly advancing, technology-intensive sector, being a government enterprise, with all its concomitant constraints, handicaps BSNL while facing private sector competition. Controversies like those surrounding the early roll out of 3G spectrum to BSNL and MTNL can also be avoided once they are privately owned and managed. The current IPO is just the first step in a process of reform of the PSU giant. Any stalling of it would seriously hamper its commercial future. The employees should realise that their interests align with the best commercial interests of BSNL.