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Fri 6 Nov 2009 06:23 PM

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BSNL to go direct to Zain if consortium talks fail

Indian-led consortium aims to take a 46 percent holding in the Kuwaiti firm.

Indian state-run telecom Bharat Sanchar Nigam Ltd may open direct negotiations for a stake in Kuwait's
Zain

if its exclusive talks as part of a consortium fail.

BSNL, along state-run Mahanagar Telephone Nigam Ltd, are part of a group led by little known Indian company Vavasi which aims to take a 46 percent holding in the Kuwaiti firm from shareholders including the Kharafi Group.

BSNL Chairman Kuldeep Goyal said on Friday that Vavasi had an exclusivity clause for talks.

"If that ends, and suppose this proposal does not go through, and there is a possibility of having a direct negotiation, we would like to look at it."

Goyal said BSNL was waiting for some information from Vavasi on the
Zain

deal and that if the company had to go directly, it would take MTNL along with it.

Goyal said there was no plan to call fresh bids for BSNL's 93 million GSM line order. The Business Standard newspaper had reported on Thursday the telecoms ministry had suggested a fresh tender to ensure more participation and better prices.

"There is no question of retendering now," Goyal said.

He said BSNL had awarded contracts for 8 million lines to China's Huawei, and was in advanced stages of price negotiations with Sweden's Ericsson for some others.

BSNL, India's No. 4 mobile operator, last year sought bids for 25 million GSM lines each for its operation in the country's north, south and west and 18 million lines in the east.

Ericsson had qualified on technical grounds for the north and east regions and Huawei for the south region.

"Immediate order to Huawei would be for 8 million lines. Total order is for 20 million," Goyal said, but did not disclose the price per line they were offering.

In 2007, BSNL had paid Ericsson about $91 a line for an order of about 13 million lines.

Talk of an initial public offer of BSNL was renewed after India on Thursday mandated more sales of shares by state-run firms and said it would cap government holdings at 90 percent.

The government, which fully owns BSNL, had last year proposed selling a 10 percent stake, looking to raise around $10 billion, but the sale was headed off by political and labour opposition.

Asked about possible timing of an IPO, Goyal said the government would decide. He said BSNL was in the process of appointing a consultant to increase shareholder value.

"What can be done so that we can improve the stakeholder value in BSNL," he said of the consultant's role, without directly referring to an IPO.

Reacting to competition, BSNL also cut call charges and launched a per-second billing plan. BSNL will charge 1 paise per second for calls within its own network, which works out to about 1.3 U.S. cents per minute, and 1.2 paise per second for calls to other networks.

After a strong response to a per-second billing plan launched by sixth-ranked operator Tata Teleservices, India's three leading mobile firms, Bharti Airtel, Reliance Communications and Vodafone Essar, have launched similar plans. (Reuters)

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Naveen Shetty 10 years ago

The move by BSNL is surprising. Why on earth BSNL which is operating in one of the fastest growing telecom market should venture out when they can hit gold at their home turf? The Government of India should ask the cash rich BSNL to stick to its home turf where BSNL is performing badly compared to the recent entrants. There should be a proper due diligence conducted by independent advisors on the Vavasi deal with Zain before any monies are parted with.