By Sandeep Gurumurthi, CNBC-TV18

Shareholders of Tata Communications can rejoice as the Department of Telecommunications, or DoT, is soon going to seek the Cabinet nod for putting over 770 acres of surplus under the hammer.

The government, though, will be the biggest beneficiary, as it will pocket half of the receipts from the sale of this prime land, which is valued at close to Rs 8,000 crore. The government feels its finally time to unlock the value of this piece of land. It Is a small stretch but in one of South Delhi's poshest areas GK1. More importantly, it is not the only piece of land of Tata Communications that will now be auctioned. A total of 770 acres of surplus land will be put under the hammer very soon.

CNBC-TV18 learns from top DoT sources that a draft Cabinet note will be circulated in the next 15 days. And then, post the Cabinet approval for auctions ( which could take about 3 months to come by) the DoT will appoint an independent agency that will conduct the auction. The entire process could take about six months but government sources insist it will be done swiftly. That could well be the case as the government will be the biggest beneficiary of this exercise.

Around 50% of the proceeds from the auction will go to the government. 29% will go to existing shareholders and about 20% will go to shareholders who rendered their shares at the time of disinvestments of VSNL, now known as Tata Communications.

But crucially promoters of Tata Communications, which is the Tata Groupm will not get any share of the receipts even though they are free to participate in the bids. This is as per the agreement signed between the government and Tata Group at the time of disinvestment.

The big question is what is the value of this land. The government or Tata Communications have never got an official estimate but the market buzz is that it could be anywhere between Rs 6,000-8,000 crore. Apart from the stretch in GK, there is another 58 acre stretch in Chattarpur, that is prime land on the Delhi-Gurgaon border.

Bulk of the land to the tune of over 500 acres is in Dighi in Pune, 85 acres in Chennai and 35 odd acres in Kolkata add up to the 773 acres of land that will now be hived off.

In response to the story, Tata Communications issued a statement to the stock exchanges clarifying that they have not heard from the government. The Tata Communications stock shot up 7% when the news broke on CNBC-TV18. It ended the day at Rs 365 on the NSE, up over 3.5%.