What are the plans of the government to monetize the real estate assets of MTNL and BSNL?

The Department of Investment and Public Asset Management (DIPAM), is seriously planning to monetize the real estate assets of the two major telecom PSUs via. MTNL and BSNL. It has already approved the monetisation of 17 properties belonging to the two state owned telecom utilities, viz. MTNL and BSNL. The total value of the identified property monetization of MTNL and BSNL combined may be valued at close to Rs.23,358 crore.

While MTNL manages government telecom services in Mumbai and Delhi, BSNL manages government telecom services in all the remaining geographies. In the last few years, these companies have been under tremendous pressure due to mounting losses even as they struggled to compete financially and technologically with the fleet-footed private sector players like Bharti and Jio. This monetization is part of the rescue plan for MTNL and BSNL.

In Phase-1 of monetization, 11 assets of BSNL worth approximately Rs.18,200 crore will be monetized. In addition, 6 properties of MTNL valued at Rs.5,158 crore have also been approved for monetisation. In Phase 1, four 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, bids were only received for 1 out of 6 properties of MTNL.

Now, the government is considering relaxing some of the stringent norms that led to the tepid response in Round 1. Investors look for wider participation and interest levels are a function of attractive pricing in the current market conditions. Hopefully, the auction process by DIPAM will take a more pragmatic and market driven approach to auctions.