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.