The department of telecommunications (DoT) wants the government to sell its entire residual stake of 26.12 per cent in Tata Communications Ltd (formerly VSNL). At the current market price, it will fetch the government a little over Rs 3,650 crore as the company shares are changing hands at Rs 491 each.

The Full Telecom Commission, the apex policy and decision making body which is chaired by the telecom secretary and has the finance, department of industrial policy and promotion (DIPP) and Planning Commission secretaries as members, will meet tomorrow to discuss sale of the government’s residual equity in the company.

Earlier, the government’s stand was that the contentious issue of forming a separate company for surplus land in VSNL should be resolved prior to selling its residual stake. However, it now believes that these are two separate issues.

“We can discuss taking an in-principle decision to sell residual shares in VSNL. The land issue is not linked with it,” said department of telecommunications secretary Siddharth Behura.

According to the shareholders’ agreement between the government and the Tata Group, post-disinvestment, VSNL was to be de-merged into two companies. One would be the telecom company VSNL under the Tatas’ control. The other would be a land company, which would remain under government control and to which VSNL’s surplus land would be transferred.

By virtue of its residual stake in VSNL, the government would naturally get a 26 per cent stake in the land company too. According to the shareholders’ agreement, the Tatas will transfer 25 per cent stake to the Government, thereby making it a Government company with a 51 per cent holding.

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