We may need to float IPO, says BSNL chief

The PSU needs Rs 60,000 crore to fund expansion.

To support its huge expansion plans, BSNL might have to resort to an initial public offer (IPO) in three years' time. The public sector telecom service provider will require around Rs 60,000 crore by 2010 to fund the expansions.

Kuldeep Goyel, chairman and managing director of BSNL, said, "An IPO might be necessary for us as we will invest around Rs 60,000 crore in the medium-term basis."

Speaking on the sidelines of a seminar by TDSAT, Goyel said the expansion plans were in line with the company's aim to double the revenues to Rs 80,000 crore in three years.

Regarding the initial public offer,he said before taking a final call on the issue it would be examined by all the stake holders, including the government.

Recently, the government had announced plans to dilute 10 per cent of BSNL's equity through the IPO route to fund expansion plans. Goyel, however, said the company had not yet filed any such proposal.

Currently, the total reserve of the company is Rs 30,000 crore. Of which, Rs 18,000 crore will be spent in the next financial year itself.

"By the end of next financial year, we are planning 13.5 million GSM connections, three million broadband and two million limited mobility WLL lines," Goyel said.

Another pressing issue that might add incentive to raise money from the public is the stagnating growth of its total revenue.

"The total revenue is likely to stay at the last years' figures of Rs 40,000 crore; but we might witness a marginal dip in the net profit which was Rs 7,800 crore in the last financial year," Goyel said.

He attributed the negative growth in the wireless services, coupled with the low tariffs and mounting operational expenses, for this performance.

"Most of the people are migrating to mobile services. To stop this attrition, we would be promoting broadband services and IPTV," Goyel added.

BSNL has announced a free insurance cover up to Rs 50,000 for its customers and the annual premium outgo of the company is Rs 10 crore. However, Goyel said mobile services would remain the key driver of growth.

Meanwhile, BSNL would be rolling out WiMax in rural areas by the middle of this year and has identified 1,000 blocks to set up 1000 BTS which would be covering 2,5000 villages. This project would require Rs 260 crore.

Regarding 3G services, Goyel said: "We are ready. We will launch as soon spectrum is given to BSNL."