So this is what it was all leading up to – the Board of Directors of BSNL, the public sector telecom operator, has recommended an IPO for listing the Government owned telco, reports the Economic Times. BSNL will disinvest 10 percent stake, at a valuation of around $100 bilion. Of course, this talk of $100 billion valuation could be just hype. If Bharti Airtel, the largest telco in the country has a valuation of $37 billion, what justifies a $100 billion valuation for the third largest…Government favoritism? Ownership of the last mile?

I’m not very surprised at the disinvestment plans, because:
— Disinvestment in the country has been on hold ever since the UPA government came to power, primarily due to the leverage that communist parties had. Recently, the communists withdrew support, and the government still survived the trust vote. Now without pressure from the left, disinvestment is back on the agenda.
— The government has been building valuation for a while now: in case of broadband, due to pressure from BSNL and MTNL, reportedly, the last mile has not been opened – giving the government telcos time to garner subscribers. There have been claims of favouritism in case of spectrum allocation as well, and even with the 3G policy, BSNL and MTNL are guaranteed 3G licenses. BSNL has been operating 3G services, but is unlikely to pay a penalty.
— Merger of BSNL and MTNL: there’s been talk of a merger between two for a while now, but while MTNL is listed on the stock exchanges, BSNL is not; once both companies are listed on the bourses, negotiations would be based on market cap.

The other interesting BSNL update is that IPTV appears to have been put on hild, a least in Kolkata. It appears that the issue was that it hadn’t signed deals with broadcasters directly, and went ahead with IOL Netcom, which was aggregating content. According to SK Chakravarty, BSNL Kolkata CGM, “Broadcasters are keen on entering into agreements with BSNL but not with any third-party which, in fact, has hindered the growth of IPTV.” IOL, as we reported earlier, has made significant losses; they have signed up some broadcasters, but if the larger players are not on board, the service just wont be able to compete with DTH and Digital Cable. Either way, it appears that content aggregators are going to lose if major broadcasters shut the door on them.

Update: BSNL appears to have launched IPTV in Jaipur

Related: Is Videocon Looking To Acquire Loss Making IPTV And VoIP Co IOL Netcom?