DoT notifies Standing Committee of challenges in BSNL/MTNL auction

One of the asset monetisation plans for Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) — auction of properties — is facing challenges due to various permissions required from the State governments, the Department of Telecommunications (DoT) has told the Standing Committee on Telecommunications and Information Technology.

For monetisation of land/ building assets, Department of Investment and Public Asset Management (DIPAM) approved monetisation of 11 assets of BSNL (tentative value ₹18,200 crore) and six assets of MTNL (tentative value ₹5,158 crore) in phase-1, wherein four properties (reserved price of ₹670 crore) of BSNL and two properties (reserved price of ₹290 crore) of MTNL have been taken for e-auction, it informed the Committee.

Challenges
“There are challenges in other properties due to various permissions required from State governments or local bodies, which are being pursued by the Department along with BSNL and MTNL. The proceeds of asset monetisation will be credited to BSNL/ MTNL to service their debt, capex and other requirements,” it said.

The DoT added that with the help of sovereign guarantee extended by the government, BSNL has raised ₹8,500 crore and MTNL has raised ₹6,500 crore. The amount realised through bonds has been utilised to restructure existing high cost debt.

“The government had also given, in-principle ‟approval for merger of BSNL and MTNL. Due to financial reasons including high debt of MTNL, the merger plan has been deferred. However, close co-operation and service integration between BSNL and MTNL has been undertaken. Further, the government has also issued instructions to all departments/ CPSEs/ Central autonomous organisations for mandatory utilisation of BSNL/ MTNL network for Internet/ broadband, landline and leased line requirements,” it said.

Assets and debts
When asked about the assets and debts of MTNL, PK Purwar, Chairman and Managing Director, BSNL and MTNL during the sitting said, “Debt of MTNL is ₹26,000 crore, revenue is ₹1,300 crore, interest payment is ₹2,100 crore. Sir, MTNL is not a sustainable company unless a very big intervention is done to address it…. About ₹30,000 crore worth assets are there. A very large chunk of assets of MTNL are either in Delhi or in Mumbai.”

Assets in Delhi had been given by DDA and they are a huge chunk. In Mumbai BSNL/ MTNL has significant assets but again the reservation and designation issue is there. They need to be unlocked, Purwar further informed.

“Unlocking will not be possible till the policy tweaking is done. So, we want to address these issues and without burning the government exchequer or the public sector banks. Frankly speaking, what we find is that we are in ICU and any day it can be declared dead or I can say catastrophe is waiting to happen in MTNL,” Purwar added in response to the Committee. The Hindu BusinessLine