DoT, Dipam lock horns over real estate asset valuation of BSNL-MTNL  

The asset monetisation process of Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) has hit another roadblock, with the Department of Telecommunications (DoT) and the Department of Investment and Public Asset Management (Dipam) locking horns over the valuation of the real estate assets.

It is learnt that the valuation done by the two companies is much higher than the one arrived at by the transaction advisors. “There is a significant difference between the valuation of assets done by BSNL and MTNL and the transaction advisors,” a top government official told Business Standard.

In July 2020, the Dipam had roped in consultants CBRE, JLL and Knight Frank as transaction advisors to carry out the exercise of selling BSNL and MTNL’s land assets worth Rs 37,500 crore. The plan is part of the government’s nearly Rs 70,000 crore relief package for the two cashstrapped public sector companies.

BSNL, MTNL and the transaction advisors have now been asked to reconcile their valuations by applying the standard methodologies and the assumptions associated with them.

“The assets under monetisation have various issues and encumbrances associated with them — for example, seeking the removal of a designation, reservation, encroachment, mutation, change of land use and so on,” said the official quoted above.

Sources say that many of the assets would require their land use to be changed to get the best sale value. BSNL and MTNL have reportedly started the process of change of land use by submitting their applications to the respective authorities.

BSNL and MTNL had initially shortlisted as many as 14 properties for sale. Later, DoT decided to sell four of these, out of which two were found to be undervalued. Hence, DoT decided not to go ahead with their auction.

DoT is of the view that some properties were valued below the circle rates in their respective states. “We were not keen on selling those assets below the circle rate prevalent in that particular state,” said a DoT official.

However, properties where the valuation differences have been reconciled to a reasonable level, can be taken up for further steps in the monetisation process.

Usually, the valuation of the property is done by the companies as well as a consultant, and the final value is arrived at after assessing the two rates.

The DIPAM is believed to have instructed BSNL and MTNL to resolve the differences over valuations and, if necessary, take the help of external agencies such as state governments, municipal other administrative authorities.

The department also feels that restrictions — such as a property should be freehold and not on lease for it to be offered for sale by the Union government — should be removed for achieving the best value out of the asset monetisation exercise.

In October 2019, the government had 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 debts, upgrade networks and offer a voluntary retirement scheme (VRS) aimed at reducing the two companies’ employee strength by half.

The real estate assets of BSNL and MTNL include land as well as buildings that are rented or leased. MTNL has around 29 retail outlets in Delhi alone. Business Standard