DIPAM to monetize PSU telecom assets worth Rs.23,300 Cr

The modern version of the Disinvestment Department, which is now called the Department of Investment and Public Asset Management (DIPAM), is now into monetization.

It has just approved the monetisation of a total of 17 properties belonging to two of the largest state owned telecom utilities, viz. MTNL and BSNL. It is estimated that the total property monetization of the two telecom PSUs could be valued at close to Rs.23,358 crore.

In India, MTNL manages government telecom services in Mumbai and Delhi while the BSNL manages the telecom services of the government of India in all the other geographies other than the two largest cities.

Both the companies have been under tremendous pressure due to mounting losses and the inability to compete with the fleet-footed private sector counterparts. This monetization is part of the rescue plan for MTNL and BSNL.

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The monetization of the state assets will be done in phases. In the first phase of monetization, a total of 11 assets of BSNL valued at approximately Rs.18,200 crore will be monetized. In addition, 6 assets belonging to MTNL valued at approximately Rs.5,158 crore have been approved for monetisation.

These two tranches will jointly account for the Phase 1 monetization target of MTNL and BSNL to the tune of Rs.23,358 crore.

Of course, the demand for the properties at the quoted reserve price still remains an issue. For instance, out of the properties that have been identified by DIPAM for monetisation in Phase 1, a total of 4 properties of BSNL with reserve price set at Rs.670 crore and 2 properties of MTNL with reserve price set at Rs.290 crore were taken for e-auction. However, the bids were only received for 1 property of MTNL, out of the 6 properties.
 

The four BSNL properties put up for auction were; BSNL land in Hyderabad (Rs.400 crore), Rajpura land parcel (Rs.70 crore), 5-acre land in Bhavnagar (Rs.41 crore) and 11-acre land in Kolkata (Rs.161 crore).

From MTNL side the 2 properties included the 1.36-acre Mumbai property valued at Rs.270 crore and 20 residential flats of senior MTNL officials for Rs.20 crore. Under the revival package, auction of properties were to raise Rs.3,000 crore.

With regards to these 6 properties put on the block earlier, the government is considering relaxing some norms that led to the failure in attracting bids for these assets.

Clearly, people are looking at more participation and the interest levels are largely a function of more attractive pricing in the current market situation. Clearly, the auction process by DIPAM needs to take a more rational, pragmatic and market driven approach to auction.