Govt may divest residual 26% in VSNL

The government is considering divesting its 26 per cent residual stake in Tata Communications Ltd (formerly VSNL), a deal that could fetch the exchequer about Rs 3,650 crore at current market prices.

The government holds 26.12 per cent stake in Tata Communications Ltd and going by the market price the value of the residual stake is a little over Rs 3,650 crore as the company shares are changing hands at Rs 491 a share.

Telecom Commission headed by Secretary Siddhartha Behura is meeting in New Delhi on Thursday to discuss divestment of the stake in the Tatas’ owned company, among other items on the agenda, an official in the Department of Telecom (DoT) said.

The meeting would also be attended by Finance Secretary D Subbarao and Secretary in the Department of Industrial Policy and Promotion (DIPP), besides other members of the Telecom Commission.

Issue of surplus land

Last year, Tatas had an option to acquire the remaining stake but the same could not be done as the two parties – government and Tatas – could not resolve the contentious issue of surplus land with the company.

Tata Communications Ltd has 773 acres of prime land, which has been put in the surplus pool, and is valued at over Rs 1,000 crore.

According to shareholders’ agreement between the government and the Tata group, post disinvestment, VSNL is to be de-merged into two companies. One would be the telecom company under the control of Tatas and the second a government-controlled company to administer the land.

Asked whether the government would sell the entire 26.12 per cent stake in Tata Communications Ltd or retain part of it till the issue of surplus land was resolved, sources said all options are open and the Department of Telecom may deliberate upon it on Thursday.

Stake sale

Government had divested majority stake in the company in 2001, while retaining 26.12 per cent stake that gave it a controlling power and two nominees on the board of Tata Communications Ltd.

According to sources, DoT had proposed setting up a new company to which the surplus land held by Tata Communications Ltd would be transferred, but no decision has been arrived at till now.

Sources said that the Telecom Commission may first consider resolving this issue and then proposing selling the residual stake.

Or, the government may agree to dispose off the residual stake, but ask for a “golden share” in the company.

A golden share means that the government would sell its stake in the company and in return ask for a single share with controlling stake at least till the controversial issue of surplus land is resolved.