BSNL seeks to rent its land to other state-owned units instead of selling

Troubled telecom company Bharat Sanchar Nigam Ltd (BSNL), which is expecting a bailout package and thinking of monetising its assets, wants to be allowed to rent its land (it has about 7,500 plots in the country with a rough valuation of Rs 70,000 crore) to other central public sector units instead of selling them.

BSNL sources indicated before the Department of Telecommunications (DoT) firmed up proposals to monetise real estate assets through the Department of Investment and Public Asset Management (DIPAM), it should be allowed to rent those plots.

Company officials say DIPAM may not prioritise the monetisation of BSNL assets, and, therefore, the company on its own can lease its land bank.

“The lease for renting BSNL land to CPSUs should be 20 years and this would give the company better returns than an outright sale would do. If our proposal is approved by the DoT we can start the process,” a source said, adding that in July last year, the company had written to the DoT, seeking its approval for renting some its properties and is awaiting a response to it.

This comes at a time when the Union government is believed to be working on a bailout package of Rs 13,000 crore for BSNL. The proposal includes a Rs 6,365-crore voluntary retirement package and 4G spectrum allotment through a Rs 6,767-crore equity infusion and monetising real estate.

BSNL is expected to post a loss of Rs 7,000 crore, including a Rs 4,000-crore operational loss, due to depreciation in FY19. 

The company has not paid salaries to its employees in the last two months, a first in its 18-year history. Its debt stands at Rs 13,500 crore, while that of the telecom sector is Rs 6.1 trillion.

The bailout proposal under consideration within the DoT would require approval from the Digital Communications Commission, the telecom sector’s highest decision-making body. The Central government is of the view that telecom is a strategic sector and a public sector presence in it is a must.

The debt-laden firm failed to secure bank loans in the last two years to meet its operational expenditure.

The revival package of both the sick public sector undertakings — BSNL and state-owned Mahanagar Telephone Nigam Ltd (MTNL) — was discussed in the last meeting of the Digital Communications Commission (DCC), earlier known as Telecom Commission, in February.

BSNL and MTNL have submitted their revival plans to the government. In those they have articulated measures to bring the two companies back on track. The two cash-strapped companies’ suggestions included converting debt into sovereign guarantee, pay revision and subsequent voluntary retirement.

BSNL sought 4G spectrum across India through an equity infusion of Rs 7,000 crore. MTNL had suggested converting its Rs 20,000 crore debt into sovereign debt and surrendering 3G spectrum.

The companies went to the extent of saying if everything failed, the Union government should take over or dissolve the companies with the condition of absorbing all employees in the DoT. The central government's structuring plan for the both the PSUs expects to address two core issues: Employees and debt.

A voluntary retirement package based on the Gujarat model is in the works and the DoT has proposed the package be funded by a bond issue over 10 years, which will bring down cost for the government.