The union of state-owned telecom service provider Bharat Sanchar Nigam Ltd (BSNL) has rejected an employee stock option (Esop) offer by Communications Minister A Raja to coincide with the company’s initial public offer (IPO).
The union, which represents over 300,000 employees, has opposed the Esop on grounds that it was opposed to the IPO in any case.
“Even if they offer us Esops we will still oppose the listing. The unions are not convinced by the arguments put forward by the management in favour of the IPO,” said V A N Namboodiri, general secretary, BSNL employee union.Last week, BSNL’s board cleared the IPO proposal that would dilute the government’s stake by 10 per cent.
The company had estimated that it would be able to raise over $10 billion (Rs 42,000 crore) from this issue. With over 70 million subscribers the IPO is needed partly to fund its massive expansion in both 2G services and create a 3G network and also get navaratna (semi-autonomous) status.
Namboodiri added that Raja has assured them that no decision on the IPO would be taken without the union’s consent. “We have made it clear that if the IPO is implemented it would lead to consequences including an indefinite strike,” Namboodiri added.
Speaking to reporters after his meeting with the BSNL union, Raja said, “If the company goes for its IPO each employee will be allotted 500 shares at Rs 10 each. These could be listed at Rs 300-400, which will enable each employee to get at least Rs 1.5-2 lakh.”
“The union did express its apprehensions about the IPO, but the management explained that employee stock options will be given at liberal rates,” Raja said, adding, “The listing and Esops for workers will give them economic and social security.”
Defending the decision for an IPO, BSNL Chairman Kuldeep Goyal, said, “We explained to the union the advantages of the IPO that it will bring about more transparency in the functioning and future requirements of the company and how Esops would benefit employees. There is no immediate need for it but we are preparing the groundwork.”
He added, however, that some unions favoured the IPO.
Meanwhile, Raja also announced that one block of 3G spectrum each to the state-run telecom companies BSNL and MTNL was being released. Raja has also approved an annual payment of up to Rs 2,000 crore from the Universal Service Obligation (USO) Fund to BSNL to compensate it for the loss it incurs from rural telephony.
Aug 8, 2008
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