Shares of Tata Communications gained nearly 12% on Wednesday on hopes the long-pending issue of sale of 773 acres of surplus land was near resolution.

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The surplus land is estimated to be worth Rs14,300 crore, BNP Paribas telecom Analyst Sameer Naringrekar wrote in a research note on Wednesday. “After deducting stamp duty and capital gains tax of 25% and dividend distribution tax of 17%, we get a per-share contribution of Rs234.”

The land in question came in Tata Communications’ custody when the Tata Group picked up a majority holding in the earlier avatar of the company — Videsh Sanchar Nigam Ltd — in 2002, as part of the then government’s divestment programme.

In 2002, Tatas had successfully bid for 25% equity stake in VSNL at Rs202 a share and then picked up another 20% through the mandatory open offer.

However, though the land came with the ownership change, the Tatas were merely its custodians rather than owners.

On Tuesday, Kapil Sibal, minister for communication and information technology, ordered an investigation into the delay in demerger and sale of the land. A senior official in the department of telecommunications, S R Rao, has been asked to submit a report by the month end.

The Tatas have always maintained that the delay was on account of lack of clarity on who should pay the stamp duty and other tax related expenses on the sale. As it was only a custodian and not owner of the land, the Tatas have declined to take on those expenses.

According to senior Tata Communications executives, not only does the company not benefit from the land, but also, it has to incur expenses on maintaining the land.

According to the 2002 shareholder agreement, made at the time of VSNL divestment, the land was to be demerged and sold, with the income from the sale of land to be distributed in the ratio of 25% to the government, 20% to shareholders who tendered their shares in the open offer, 26% to the government for its existing holding and 29% to existing shareholders.

As the promoters, the Tatas will get about 5%, as they are part of the 29% public shareholding.

Once the land is sold, Tata Communications would be free to raise capital through equity and thus deleverage its books, and also fund its capital expenditure plans.

As the market cheered the stock, two foreign brokerages —- HSBC and BNP Paribas —- raised their target price for the stock.HSBC upgraded the recommendation for Tata Communications from Underperform to Neutral and raised the target price from Rs225 to Rs241.

BNP ugpraded the stock rating from Reduce to Buy, while raising the share price target to Rs313 from Rs230 earlier.

On Wednesday, the stock of Tata Communications gained 11.9% to close at Rs245.95 on the BSE when the broader market gained about 1.21% to close at 18206.16.