After the announcement of merging public sector telecom companies MTNL and BSNL, the government is planning to take Infrastructure Investment Trust (InvIT) route to execute its plans of making the asset monetisation programme of BSNL a success. This will be the first major use of the route by a public sector company and it follows last week’s announcement by the Reserve Bank of India allowing banks to invest in InvITs.

The government has estimated the total value of assets for monetisation at Rs 38,000 crore to be carried in out over four years. This move appears to be a huge confidence booster for the InvIT business. At present, the InvIT market has touched a value of Rs 40,000 crore recently, but so far it has raised money only from the private sector. Union finance ministry had put the possible size of the market at close to Rs 1 trillion by the end of this fiscal. It now seems that the BSNL-MTNL asset monetisation programme could become a good part of that estimate.

InvITs are designed as a tiered structure, which in turn invests in eligible infrastructure projects either directly or via special purpose vehicles. The returns from the project are distributed as dividends at fixed intervals — usually a year.