FM-led group okays monetisation of BSNL, MTNL assets worth Rs 26,000 cr

The asset sale of Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) would be decided by the ‘Alternate Mechanism’ group headed by Finance Minister Nirmala Sitharaman.

The latter has already approved sale of 11 properties of BSNL and six of MTNL, worth Rs 26,000 crore. An official said this was done on January 24.

The Cabinet Committee on Economic Affairs comprises 11 ministers and three invitees. Part of its mandate on strategic disinvestment has been delegated to the Alternate Mechanism (AM), which has Roads Minister Nitin Gadkari and the relevant administrative minister. It is learnt the AM has approved the property sales at official circle rates.

“Once the transaction advisor and auctionnaire is finalised, it would again go to the AM for final approval to begin the asset sale,” said the official quoted earlier.

The original proposal had 20 assets of BSNL and 10 of MTNL. These include the telecom factories and health centres of both firms. The two will monetise assets worth Rs 37,500 crore in the next three years.

In October, the Union government approved a Rs 69,000 crore revival package for BSNL and MTNL. This includes merging the two loss-making entities, monetising their assets and giving a retirement package to employees. The aim is for the combined entity to become profitable in two years.

The package calla for infusion of Rs 20,140 crore for purchase of fourth-generation technology spectrum, Rs 3,674 crore for goods and services tax to be paid on spectrum allocation, the companies raising Rs 15,000 crore in debt on a sovereign guarantee and the government funding a Rs 17,160 crore retirement package and another Rs 12,768 crore on retirement liability.

Proceeds of the sovereign bonds issue will be for restructuring the debt and on other expenses. The combined entity is to service it.

Around 92,000 employees of BSNL and MTNL have opted for a voluntary retirement scheme. Around 100,000 from BSNL were eligible, of about 150,000 staffers. Each will get an amount  equal to 35 days salary for each completed year of service and 25 days salary for every year of service left until superannuation.

MTNL has reported losses in nine of the past 10 years and BSNL since 2010. The total debt on both companies is Rs 40,000 crore, half on each.