India says IPO plans for BSNL 'on track'

11 Aug 2008

India revived its plans to float state-owned telecoms BSNL in the country's largest-ever IPO, a Reuters report said.

Government officials also said they were in talks to get trade unions to support the $10 billion deal, the report added.

The government said in January it aimed to list BSNL but put the plan on hold after opposition from its communist allies and trade unions.

The flotation plan for India's top telecoms firm got a boost in July when the government and the left parted ways over a controversial nuclear deal with the US.

The Reuters report further quoted Telecoms Minister Andimuthu Raja as saying that the board of BSNL had approved the IPO proposal and he had asked the firm to negotiate with the unions, who fear a public flotation would mean job losses.

As a sweetener, BSNL's 304,000 employees have been offered 500 shares each, Raja said.

But the chief of the BSNL employees' union rejected the government's offer and said the opposition would continue.

Analysts say union opposition and weak market sentiment, Indian shares have lost a quarter of their value this year, and IPO plans of about $4.1 billion have been deferred, could limit investor appetite for large offers.

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