View from City Road: The perils of privatisation

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Plague permitting, the Indian government will shortly be dusting off plans to privatise VSNL, the country's main telecommunications company. The issue was being masterminded by Kleinwort Benson but was pulled some months ago. Embarrassingly for KB, it happened after the book building process had got under way.

As always, the main problem was price. The Indian government wanted more than KB seemed capable of raising. Meanwhile, the global offering last month of dollars 900m of stock in Pakistan Telecom, co-led by Robert Fleming, went like a dream.

The old enemy's success apparently caused such dismay in Indian government circles that, to the eternal sadness of KB, Robert Fleming is now being bolted on to the VSNL flotation team. There is even talk of ejecting KB altogether. Privatisation may be a boom business for British investment banks, but it plainly grows more cut- throat by the day.