The government is likely to disinvest 10 million shares in Videsh Sanchar Nigam Ltd (VSNL, the country's international telecom carrier), reducing its stake from 65 per cent to just over 54 per cent. The issue is expected to help the government raise between Rs 800 crore and Rs 900 crore (some $185-210 million).
The size of the issue _ to be split into a global depository receipts (GDR) offering and an issue in the domestic markets _ is among the early decisions that a committee set up to manage the VSNL disinvestment is expected to clear. The government has set up a five-member committee to finalise its second tranche of disinvestment in VSNL.
A final decision on the size of the VSNL issue, expected pricing, selection of global coordinators and expenses will be taken by the committee and the core group on disinvestment. The committee and the group are expected to hurry through the process so that the government receives the disinvestment proceeds soon.
Sources said the government would go ahead with two issues _ Concor and VSNL _ first. It is also to disinvest in the equity of Indian Oil Corporation and Gas Authority of India Ltd. The government has budgeted Rs 5,000 crore to accrue by way of disinvestment in public sector undertakings this fiscal year.
The government currently holds 65 per cent of the Rs 92-crore equity of VSNL. If it divests 10 million shares, its shareholding in the company will come to 54.13 per cent. The government wanted to hurry through with the disinvestment programme this January to shore up its revenues in fiscal 1997-98.
However, it could not do so after the disinvestment commission and the then minister for communications Beni Prasad Verma put a condition that the government should not go ahead with the offering unless it ensures a "good price" for the shares.
It was pointed out that the ministry of finance proposal to disinvest at $11.5 a GDR (equivalent to two shares) was at divergence to an earlier market quote of $13.93 and it was pressing for the issue just to "balance the budget".
The price before the government is even more unattractive now with the VSNL GDR ruling at some $10.5. Given that most GDR issues in the past have been priced at a discount to the ruling market price, the government may receive only between Rs 800 crore and Rs 900 crore, sources said.
The government was also considering a strategic disinvestment of five per cent equity in VSNL in favor of an international telecom carrier. This route was being favoured so that it could get a disinvestment price at a premium to the current market price.
