MTNL to offer 1.4 crore shares to employees

At present the government holds about 56.2 per cent stake in the telecom major. Rajagopalan, however, refused to divulge details about the pricing of the issue saying that it was for the government decide.

He said MTNL favoured the stock option at substantial discount to the ruling price as it would motivate the employees to take on competition from the private operators.

On the timing of the issue, he said MTNL wanted the stock option to be exercised soon as "this was the right time to offer the shares to employees as MTNL scrips were ruling low".

On Tuesday MTNL scrips were quoted at a 52-week low of Rs 148in BSE. MTNL has a total equity of 63 crore shares, including three crore offered in the global depository receipts issue in December 1997.

MTNL had last year scrapped a proposal to buyback three crore shares accounting for five per cent of total equity due to the volatility in the market.

The Union cabinet had cleared the buyback proposal as part of its efforts to meet the target of Rs 5,000 crore from public sector disinvestment for the year 1998-99.

On the need for the stock option scheme, Rajagopalan said "the key of success of the company is the employees. If I would not have motivated my workforce, I would not have been able to sell my services in a competitive environment".

MTNL, which operates telecom services in two of the most lucrative cities in the country (Delhi and Mumbai), has a workforce of about 64,000. Of the total workforce, about 4,000 employees in the gazetted and above rank are still on deputation from the Department of Telecommunication.

The other state-owned telecom giantVidesh Sanchar Nigam Ltd (VSNL) has also offered a stock option scheme to its employees.