Thomas K Thomas on The Hindu Business Line on June 5, 2009
New Delhi, June 4 In what could be a softening of stance, the employees union of Bharat Sanchar Nigam Ltd said that it was prepared to discuss the company’s proposal for an Initial Public Offering.
While the union maintained that it was still opposed to the idea of listing BSNL’s shares on stock exchanges through an IPO, its officials said that they were prepared to hear what the management and the Communications Ministry had to offer.
Speaking to Business Line, Mr V. A. N. Namboodiri, General Secretary, BSNL Employees Union, said, “If they call us we are ready to discuss the IPO issue with the Government.”
Govt proposal
Asked whether the union will agree to the proposal if the Government offered them sops in terms of bettering their pay package, Mr Namboodiri said, “We have not come to that stage yet. We will hear what they have to say. So many of the promises made to us by the Government at the time of corporatising BSNL are still to be met. ”
Mr Namboodiri, however, categorically said that there was no change in the union’s stance on the proposed IPO and it would strongly oppose the move. But sources said that the union may push hard some of its long-standing demands related to higher pay, promotion, absorption, allowances, giving ‘maharatna’ status to the PSU, pension and employees stock option. The union may also seek assurances on paper from the Government about the employees’ job status.
Asked why the union was opposing the proposed listing, Mr Namboodiri said, “Look at MTNL, which got listed much earlier. It does not have money to even pay the salaries. And see what has happened to VSNL. The name itself has been changed. What assurances can the Government give that we will not face the same fate after divesting BSNL’s stake,” Mr Namboodiri said.
Actual listing
While the actual listing of BSNL may still be some time away, the fact that the unions have agreed to discuss the IPO proposal could be an opening for the management to negotiate a way out.
The State-owned telecom company had approached the Government last year with a proposal to divest 10 per cent stake to the public in a bid to raise about $10 billion. The company was hoping to use the funds for its expansion. However, the plans got shelved after the unions rejected an offer from the Communications Ministry to improve emoluments. With the unions agreeing to discuss the issue again, this time the BSNL management could sweeten the deal.
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Excerpt from above:
With a revised offer, BSNL is hopeful of a breakthrough, as the management is confident that a large number of employees and the smaller unions are open to negotiate on the stock offer. In a bid to win over some of the employee unions, BSNL is also likely to widen the scope of the discussions related to the listings to include other issues, such as long-pending employee demands for higher wages, allowances, promotions and other benefits in line with private sector companies.
Besides, the BSNL management may also ask the Centre to give the company ‘maharatna’ status, which the unions have been demanding for over a decade now. According to ministry officials, the Centre may also take a leaf out from a Danish government strategy and use a portion of the proceeds toward employee pension funds and for training and re-deployment of a huge number of the PSUs employees.
The government may announce a funding package for retraining large sections of the BSNL workforce for redeployment into new data-driven businesses, such as broadband.
A top BSNL executive said that the company had already begun informal talks with leaders of different employee unions, while adding that one of the proposals being considered was to sweeten the earlier offer. But the executive also clarified that since formal talks were yet to begin, the new offer had not been presented to the employee unions yet.
The new UPA regime is keen on BSNL’s listing, and it hopes that a 10% stake dilution in the company will fetch over Rs 40,000 crore. Mr Raja, who retained the portfolio in the new UPA administration, had recently said that he had asked BSNL’s management to hold talks with the employee unions and address the latter’s fears on listing.
Last year, Mr Raja said that BSNL would list at Rs 300-400 per share, pegging its valuation at $37-45 billion, which is not even half of the $100billion valuation that the company’s management has been claiming since January 2008.
However, a top BSNL official had then clarified to ET that this was only the bookvalue of the company and did not include its asset value. The executive also added that the minister’s figure was only to make a point that this (Rs 300- 400 per share) would be the minimum that employees can expect, when it gets listed.
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