Task force for MTNL divestment

The government has constituted a 7 member high-level task

force to work out modalities for the proposed disinvestment of about 5 per cent of its

stake in Mahanagar Telephone Nigam Ltd. (MTNL). Various modalities including selection of

bankers and time frame for disinvestment will be worked out by the task force, which will

bring down the governments share in the telecom blue-chip company to 51 per cent.

The cabinet had earlier decided to divest 19 million shares

in MTNL through an institutional offering in Global Depository Receipts (GDRs) or in the

domestic market with an expected revenue in the range of Rs. 400 crore. MTNL had last hit

the GDR market in 1997.

According to sources, presentation and account making to

global investors have been done and moreover, global investors know MTNL's strengths and

the exercise is unlikely to be time consuming. Finally, it is at the discretion of thee

task force to recommend and then the core group and the cabinet to decide about the timing

and other details of the issue.

About three years back at the time of the previous GDR

issue, MTNL had managed to obtain the highest money (Rs. 900 crore) for the government of

India and that too amidst a difficult situation. This was the most successful issue

carried out by any PSU in most difficult times.

According to analysts this is the right time to hit the

market, as economic indicators including industrial recovery and inflation in the country

are quite favorable.