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Pre-IPO, BSNL Gets Spectrum, Waivers; To Manufacture Handsets, Modems; Unions Stalling IPO

The Indian Government has already approved the release of one block each of 3G spectrum of 2x5MHz in the 2.1 GHz Band for BSNL and MTNL, both public sector telecos. The government release itself states that they’re allowing government owned companies “a first-mover advantage over private operators”. What’s more, they’re also being given a block of 20 MHz Broadband Wireless Access (BWA) spectrum in the 2.5 GHz band, at 2645 MHz.

Besides this, they’re guaranteed 3G and BWA spectrum at a price equal to the highest bid in the service areas. License fees for rural lines has also been waived for BSNL, and they’re getting upto Rs. 2000 crore per annum from the USO Fund to make up for the removal of the Access Deficit Charges. Not that it’s going to do them much good, though. ET reports that BSNL is likely to launch 3G only by June, after receiving equipment from Ericsson. The initial launch will be for 10 million lines.

BSNLs plan to offer ESOPS to its employees isn’t cutting much ice with them though – they’re holding out for more. As per ET, the ESOPs would have meant a windfall of Rs. 1.5-2 lakh for each employee. BSNL is expecting 2008-09 revenues at Rs 45,000-50,000 crore.

Raja expects BSNL to list at Rs. 300-400, which would value the company between $37-45 Bilion, much much more realistic than the $100 billion that was being quoted earlier. Remember that Bharti Airtel, the biggest mobile company currently has a market cap of close to $40 Billion. BSNL has more landline subs, and is the third largest mobile player. An of course, all the government sops would count for something. Maybe.

BSNL plans to invest upto $3 billion per year over the next 3 years on overall capex. The PSU will invest Rs. 900 crores (around $220 Million) in manufacturing Consumer Premise Equipment (Modems) at its Kolkata factory. DNA reports. they’re also planning to manufacture handsets, which they will supply to other telecom providers and other mobile handset makers.

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