Asset monetisation drive of beleaguered BSNL, MTNL hits roadblock again

The asset monetisation drive of the beleaguered Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) has hit a bump, yet again, as it faces land use change hurdles in some states.

It is learnt that the monetisation exercise is not working and the department of telecommunications (DoT) will take a fresh look into it.

Recently, during the review of the tel­e­com sector by the Prime Minister, the is­sue of selling the assets of BSNL and MTNL was also flagged off by the department. The Union government is facing hurdles as far as getting the land use changed for the assets of BSNL and MTNL.

An official said, “At present, the land assets of both the companies are either for residential colonies, telephone exchanges or government-run institutes. This land was allotted to the two state-owned companies at cheaper rates and getting the land use changed to sell them is a cumbersome task and some states are not cooperating.”

However, the department hasn't given up on the proposal yet and is likely to test waters by offering a few assets for sale.

A list of around six real estate assets of BSNL and MTNL has been sent to the Department of Investment and Public Asset Management (DIPAM) after evaluation. Now, it is up to DIPAM to begin the asset sale exercise.

These assets include a Regional Telecom Training Centre (RTTC) at Rajpura in Punjab, an RTTC in Hyde­rabad and a BSNL building in Kolkata.“This drive will be a showcase exercise and if we get a good response, we will try and persuade other states to come forward for monetisation,” the official quoted above said.

Previously, the issue with BSNL and MTNL asset sale was stuck over DIPAM and DoT's disagreement over the valuation of real estate. Both the companies and the transaction advisor were asked to reconcile their values by applying the standard methodologies and the assumptions associated with it.

The asset monetisation drive was started with the aim of selling land assets worth Rs 37,500 crore by roping in consultants — CBRE, JLL and Knight Frank — by DIPAM in July 2020.

As many as 14 properties were shortlisted by the two cash-strapped companies for sale and DoT decided to start the monetisation exercise by offering two such assets for auction. Usually, the valuation of a property is done by the firms and a consultant, separately. The final value is arrived at after assessment of the two rates.

The sale of land banks of BSNL and MTNL is part of the relief package announced by the Centre for the two public sector undertakings.

In October 2019, days before Diwali, the government approved a revival package of nearly Rs 70,000 crore for both BSNL and MTNL. 

Monetising real estate assets worth Rs 37,500 crore is part of the overall relief package that would be used to retire debt, upgrade networks and offer a voluntary retirement scheme (VRS). The VRS is set to reduce the companies’ employee strength by half.