Sale of 21 MTNL land assets hits roadblock

Sale of 21 land assets of the Mahanagar Telephone Nigam (MTNL) has hit a roadblock as the Department of Telecommunications (DoT) is unwilling to part with the funds garnered, as mandated by the Delhi Development Authority (DDA).

“We have to give 50 per cent of the amount from the sale to DDA, it is a mandate. Then there would be a capital gains tax, spectrum usage charges, and licence fee. We’ll be left with virtually nothing,” an official told Business Standard.

The department is currently negotiating with the DDA for some relaxation.

These land assets of MTNL are marque properties in the national capital and Mumbai. In October 2019, the government approved a Rs 70,000-crore relief package for Bharat Sanchar Nigam (BSNL) and MTNL. Monetising real estate assets worth Rs 37,500 crore was also part of the package that would be used to retire debts, upgrade networks, and offer a voluntary retirement scheme (VRS) aimed at reducing the companies’ employee strength by half.

The relief package includes a sovereign bond issue worth Rs 15,000 crore, to be serviced by the two telecom firms. Also, BSNL and MTNL will be allotted 4G spectrum at an administered price, pegged at the 2016 auction value. The two firms would be allotted 4G spectrum worth Rs 20,140 crore, Rs 29,937 crore for VRS covering 50 per cent of their employees, and Rs 3,674 crore for goods and services tax (GST) that will be levied on allocation of radiowave.

Experts believe the asset sale is an important exercise with regards to the VRS as the finance arranged through the sale of land bank will be utilised towards the payment of VRS compensation of the staff of both the companies.

As far as the asset sale is concerned, it is not a one-time exercise and will be spread over a couple of years. Dipam will work in close coordination with the two companies and the DoT. Business Standard