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MTNL To List On NYSE

Indian telecom major and ISP Mahanagar Telephone Nigam Limited (MTNL) plans to list on the New York Stock Exchange (NYSE) within the next two months.

The listing will coincide with the next block of divestment so as to provide an option to its European stakeholders to convert their equity into American Depository Receipts (ADRs).

"We plan to list at NYSE Bourse along with the divestment of 19 million government shares for which a book building exercise will begin immediately," says S. Rajagopalan, chairman and managing director of the MTNL.

Rajagopalan said the company planned to list at the NYSE the entire Global Depository Receipts (GDRs) being traded at the London Exchange currently. However, MTNL does not have the plan to delist from London consequent to European investors opting out of GDRs.

MTN will be the first Indian company to list on the NYSE, though Infosys Technologies, the undisputed leader in the Indian software industry, had already listed on the NASDAQ.

The NYSE listing along with the ADR conversion will boost MTNL's international presence. Rajagoplan said the company expects the share value at the domestic market to shoot up substantially after the NYSE listing following appreciation by international investors.

MTNL is also changing its accounting norm in line with the Generally Accepted Accounting Practices (GAAP) followed in the U.S. This is mandatory for seeking a listing on NYSE.

"The listing exercise will cost us around $1 million and we hope to complete it within next two to three months," says Rajagopalan.

Meanwhile, there is a move to hive off MTNL's Internet services and other value-added services into a wholly owned subsidiary, Prime Telecom.

Prime Telecom, which would be registered and headquartered in Mumbai, will initially have an authorized equity capital of around $25 million. Later, it will form strategic joint ventures and also consider selling its stake to new partners at a premium.

Incidentally, MTNL posted a turnover of $360 million in 1998-99, a growth of 14 per cent over the previous financial year. It had a better profitability ratio, with the net profit being $329 million (24 percent of the turnover) last year, growing by 16.6 per cent over the previous year.

MTNL is one of the very solid listings on the Bombay Stock Exchange (BSE), though only three percent of its stock is with the public. The government of India owns 56 percent, with the foreign institutional investors (FIIs) accounting for the remaining 16 per cent.