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As part of its plan to revive ailing Bharat Sanchar Nigam Limited (BSNL), the department of telecommunications (DoT) has sought approval from a group of ministers (GoM) to monetise some of the land bank of the state-owned telecom behemoth, which is valued, based on circle rates, at Rs 13,439.5 crore.
DoT, in its note to GoM, said BSNL had identified 82 land parcels across the country for monetisation through partnerships with private companies. In the first phase, it has asked for approval for 10 parcels, beginning with five, as a pilot project.
According to the note, BSNL is likely to get Rs 3,425 crore on absolute basis and Rs 2,609 crore on net present value (NPV) basis after applying a discounting factor of 12 per cent with land being valued on applicable circle rates. However, the actual gain for BSNL is expected to be much higher.
BSNL wants to utilise the money for capital investment for its revival and revitalisation, DoT has stated.
BSNL had accumulated losses of Rs 24,681 crore as on March 31, 2013. The company reported a loss of Rs 7,884 crore for FY13. This was its fourth straight loss-making year, although these were lower by 10.9 per cent compared to the Rs 8,851-crore loss in FY12.
BSNL has identified the land parcels suitable for possible monetisation in consultation with a consortium of Voyants Solutions Private Limited and Innovest Advisory Services Private Limited that has also developed the methodology for land monetisation.
While the Sam Pitroda Committee, in 2010, had suggested BSNL to create a separate subsidiary for its unused land bank and other real estates, DoT has said BSNL can undertake the process of land value monetisation without creating a separate subsidiary for faster action.
BSNL has proposed, as a pilot project, to take up 10 land parcels from the identified 82 for monetisation. Out of the 10, the case for monetisation of five land parcels is being processed for the consideration of the GoM. The proposal for the remaining land parcels are currently being prepared by BSNL.
Besides the permission to monetise land bank of BSNL, the DoT has also sought GoM’s views on if BSNL would need to pay the capital gain tax, at the rate of 20 per cent on net income from this, or not. If exemption of capital gain tax is not feasible, DoT has requested GoM to permit financial assistance to BSNL for payment of the same. On the other hand, it has also asked for financial support for payment of licence fee on the likely revenues earned in the monetisation of properties.
The main properties, for which it has sought GoM’s views, are a 37-acre land at Borivali (West), a 6.63-acre plot at Santa Cruz (West), 25.5-acre land at Deonar, in Mumbai. Besides, it owns 1.48 acres at Sector 33, Noida, 0.84 acre in Sector 18, Noida, and a constructed administrative building with two towers at Greams Road in Chennai.
For the properties in Mumbai, which are partly used, BSNL has proposed to a few options for possible monetisation, including development of residential complexes, special economic zones (SEZ) for information technology and related industries, SEZs with corporate park, core knowledge parks with hospitality infrastructure. However, in some cases like development of corporate parks, BSNL would require permission to change in land usage. The monetisation could happen through a combination of upfront payment and annual instalments with a 90-year lease period, it added.
At Noida plots, it intends to seek permission to sub-lease after it develops office complexes. Monetisation would happen through an upfront payment and annual instalments over a period of time. At Chennai, it has also sought approval for sub-leasing of free space.
Meanwhile, the monetisation would happen through transparent bidding process under the supervision of BSNL directors, and it has sought GoM’s permission to keep the reserve price at market rate.
Earlier this month, the Cabinet has cleared a proposal to refund broadband wireless access (BWA) spectrum money to financially stressed BSNL and Mahanagar Telephone Nigam (MTNL). Under this, BSNL would get Rs 6,725 crore and MTNL Rs 4,534 crore (plus interest from January 31, 2013).
There is also a proposal to waive the one-time fee for BSNL and MTNL worth about Rs 12,000 crore for the additional spectrum these two state-run companies hold. Plans to divest BSNL’s tower assets into a separate company for future monetisation are also underway.
