Monetising assets: BSNL wants to sell lands which it does not own

State-owned, loss-making telecom firm BSNL’s move to monetise its real estate assets in order to shore up its revenues has run into trouble as the department of telecommunications (DoT) has said since the ownership of the properties do not vest with the firm, its proposal cannot be processed. The telecom firm had recently moved a proposal before the DoT that it be allowed to sell part of its land banks and buildings to bring about a financial restructuring of the organisation. However, DoT officials said the sale of property can only happen if the title of the same vests in the name of the company, which is not in the case of BSNL, and hence, the proposal lacks in merit and cannot be processed. The reason is that most of the land bank which BSNL has was acquired by DoT before BSNL came into existence. As a result the ownership of these land is with the government and not BSNL. Second, lands and building which are with BSNL were mostly acquired for building exchanges for the purpose of increasing rural coverage. These lands were acquired from local municipal bodies for a token amount for technical purposes.

If these land are to be sold, it would require making change in the purpose for which they were aquired and the local bodies may object to the sale and may ask that it be given back to them. “Recently, we did a fair valuation of a third of our land holdings. Based on this, 4,030 plots measuring a little over 2 crore sq mtr is worth around Rs 67,000 crore in the market today. We can monetise these land holdings and use the proceeds for expanding our network and infrastructure,” BSNL chairman and managing director Anupam Shrivastava told FE. BSNL conducted the valuation as part of its project Vasundhara with KPMG as the consultant. When queried that how can BSNL make a proposal with regard to properties which do not belong to it, company sources told FE that if the government wants the ownership can be changed with the Cabinet’s approval.

DoT officials said BSNL in its proposal has not taken into account the issue of ownership of the land and purpose for which they were acquired. If the bulk of the land which has value does not belong to BSNL and therefore cannot be monetised the way it wants then whatever little it has which really belongs to it like buildings and offices which can generate rental income would not make much of a difference to what it currently earns through such measures. For instance, in FY16, BSNL earned Rs 41.85 crore through property rentals. Though it has not declared its FY17 numbers so far, the growth would not be exponential. BSNL has been posting losses since FY13. In FY16, its net loss stood at Rs 3,880 crore and revenue at Rs 28,449 crore. It has got a huge workforce at 2 lakh as a result of which around 55% of its revenues goes into wages. A minimum of 8% of annual increase happens in salaries of employees in BSNL – 3% minimum by way of regular increment and 5% through dearness allowance revision. Against this, BSNL’s annual revenue growth is 4-5% at best. It has estimated that to reduce workforce by way of a voluntary retirement scheme (VRS), it needs to spend around Rs 18,000 crore.