New Delhi, May 8: Before taking any decision regarding selling its residual stake in Tata Communications Ltd (formerly VSNL), the government will first consider the right issue offer made by the company as well as form a surplus land company. The decision was taken today at a Telecom Commission meeting which was chaired by department of telecommunications secretary Siddharth Behura.

“These are some of the issues that should be resolved prior to selling off residual shares in VSNL,” said Behura. On Wednesday he had said, “We can discuss taking an in-principle decision to sell residual shares in VSNL. The land issue is not linked with it.”

The Telecom Commission is the apex policy and decision making body for telecom in the country. Today’s meeting was attended by finance secretary D Subbarao. The secretaries of the Department of Industrial Policy and Promotion (DIPP) and Planning Commission are also part of telecom commission.

According to the shareholders’ agreement between the government and Tata Group, VSNL was to be de-merged into two companies post-disinvestment. One would be the telecom company VSNL under Tata control while the second would be a land company that would remain under government control. VSNL’s surplus land was to be transferred to this land company. By virtue of the residual stake in VSNL, the government would naturally get a 26 per cent stake in the land company. As per the shareholder’s agreement, the Tata Group were to transfer their share of 25 per cent stake to the government, thereby making it a government company with a majority 51 per cent holding. However, this did not take place and subsequently has become a contentious issue. The surplus land company would have 773 prime acres in Delhi, Mumbai, Pune and Kolkata. Though the exact value of land is not yet clear, experts say it is surely worth Rs 1,000 crores.

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.