BSNL may get subsidy or exit route from unviable ops

Loss-making BSNL may get financial compensation for maintaining unremunerative services, like its offerings in rural areas as part of the Universal Service Obligation, or would be allowed to take a commercial decision to continue or exit from such services.

"...If BSNL is being asked (by DoT) to maintain an uneconomic service and not to exit from it even if its commercial decision is to exit then they (BSNL) have to be compensated," a source in the Telecom Ministry said.

Earlier, state-run BSNL had sought about Rs 4,000 crore subsidy from the Department of Telecom (DoT) for the current financial year to meet its operational costs. BSNL's current subsidy period ended in July this year.

BSNL provides all telecom services, fixed line, mobile, STD, ISD, broadband, Internet and others, in 20 circles.

The telecom PSU has been facing severe financial pressure as its losses have more than tripled to about Rs 6,000 crore during 2010-11 mainly due to hefty outgo for employee salary and expenses borne by the PSU for procuring 3G and BWA spectrum.

The company had registered a net loss of Rs 1,823 crore during 2009-10. BSNL had reported the highest net profit of over Rs 10,000 crore in 2005-06. Its profits have been falling since then.

Cash-strapped BSNL has recently written a letter to DoT in which the telecom operator had offered to surrender its Broadband Wireless Access (BWA) spectrum in 17 circles, seeking a refund of Rs 8,313.80 crore.

BSNL has been given a project by the Government to connect five lakh villages with the Internet broadband services under the National Optical Fibre Network (NOFN) project in the next two years.

In addition, BSNL, under a partnership with Union HRD ministry, would also set up a network connecting 419 universities and 20,000 colleges through broadband with high bandwidth capacity.

The telecom ministry is likely to spend up to Rs 5,000 crore from the Universal Service Obligation Fund (USOF) to give subsidy to the telecom operators for providing broadband services in rural areas of the country.
 
The Government earlier had proposed creating a NOFN for providing broadband connectivity to rural areas, initially up to panchayats.
 
The optical fibre network would help various service providers and users get broadband through a variety of wired and wireless solutions. Till now, the broadband facility has been limited to metros and major cities.