BSNL bets on realty assets to recoup losses

State-owned erstwhile blue chip Bharat Sanchar Nigam (BSNL) has drawn up plans to lease its real estate assets to developers as it looks to recoup revenue and mounting losses.

After the defence and railways, BSNL is the country’s largest landholder. Its properties span 3,500 towns across India worth thousands of crores making it the largest state-owned companies in terms of land assets. Company officials told the Financial Express that BSNL is looking to lease eight of its prime land banks to develop ICT parks in a bid to generate additional revenue of Rs 500 crore.

“Once the offices are built, the office space in these parks will be leased out to companies who would also be BSNL’s captive customers for their communications needs ranging from landline connections, to broadband and wireless connectivity,” a senior company official told FE.

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BSNL’s move to depend on its land holdings mirrors the strategy adopted by state-run peer MTNL, which offers communications services in Mumbai and Delhi and is also leasing out prime properties in the two metros. Analysts conservatively estimate the land bank could fetch upwards of Rs 5,000 crore, translating to about Rs 79 per share. However, decisions on the proposals for development or sale of the land bank have been hanging fire for the last four years.

BSNL had earlier considered the franchise option to outsource its 3G mobile services across the country in order to reduce the investment that it has to make in rolling out the 3G services, but unrealistic conditions in its bid documents ensured that no bidders came forward.

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The state-owned telco has registered a series of dismal results over the last last four years that saw the erstwhile monopoly being reduced to a bit player in the fast-growing telecom market.

Apart from operating losses, the telco is also marred with internal problems. On Wednesday BSNL employees staged a day-long agitation demanding pay revisions and perks that were frozen for over a year under the pretext that BSNL was financially weak.