Indian left, unions oppose telecoms BSNL stake sale

NEW DELHI Jan 15 (Reuters) - India's biggest communist party, whose support is vital for the federal coalition, on Tuesday opposed a government plan to sell a 10 percent holding in telecoms Bharat Sanchar Nigam Ltd (BSNL).

On Monday, the government said it was considering an initial public offering in the state-owned firm that could raise as much as $10 billion, which would make it the country's largest IPO.

"(The party) calls upon the... government to desist from such a move, which will be detrimental to BSNL and public interests," the Communist Party of India (Marxist) said in a statement, adding the firm had enough surpluses to fund its expansion.

Workers unions at BSNL also opposed the sale plan, saying a lack of infrastructure and not funds was affecting growth.

"The disinvestment of BSNL, instead of bringing funds to BSNL or Government, will be the first step to gift the No. 1 telecom company in the country to the private operators," a joint forum of BSNL unions said in a statement.

BSNL is India's top ranked telecoms firm by subscriber numbers, but in mobile services lags Bharti Airtel Ltd (BRTI.BO), Reliance Communications Ltd (RLCM.BO) and unlisted Vodafone Essar that is controlled by Britain's Vodafone (VOD.L).

S.D. Saxena, finance director at BSNL, said on Monday the government had valued the company at $100 billion.

BSNL, which provides fixed-line and mobile services across much of India, has been facing an uphill task in new subscriber signings due to inadequate infrastructure.

In 2006, it had called for bids to supply 45.5 million GSM lines, but the tender size was later reduced to 23 million lines after the government asked it to renegotiate for a lower price.

Just 13 million lines of this order were filled by the lowest bidder, Ericsson (ERICb.ST), while the remaining was passed over by both the Swedish firm and by second-lowest bidder Nokia Siemens Networks [NSN.UL].

BSNL had posted revenues of 397.15 billion rupees ($10.1 billion) in the fiscal year ended March 2007, and net profit of 78 billion rupees.

India began selling holdings in state-run firms in 1991, and by July 2007 received about 517 billion rupees from these transactions. Some of the firms it sold stakes in are top carmaker Maruti Suzuki India Ltd (MRTI.BO), telecoms firm Videsh Sanchar Nigam Ltd VSNL.BO, National Aluminium Co Ltd (NALU.BO) and Bharat Aluminium Co. ($1 = 39.3 rupees) (Reporting by C. Jacob Kuncheria; Editing by Ranjit Gangadharan)