BSNL, MTNL revival: GoM proposes refund of BWA spectrum fees

DoT has proposed the refund to BSNL and MTNL as this had seriously depleted their cash reserves

The Group of Ministers (GoM) looking into a revival strategy for Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) has proposed three ways for the government to refund the broadband wireless access (BWA) fee to the state-owned telecom operators after they surrender the spectrum.

The department of telecommunications (DoT) had proposed the refund as the payment had seriously depleted the cash reserves of both. The two companies had asked for a refund of the entire amount paid. BSNL had paid Rs 6,725 crore and MTNL Rs 4,534 crore. Both had together accumulated a loss of Rs 39,314 crore (BSNL Rs 24,681 crore and MTNL Rs 14,633 crore) at the end of March 2013.

While the modalities will be worked out with the ministry of finance, the GoM discussed a detailed proposal on the refund early this month.

Under the first measure, the GoM suggested full refund to both. In the second, it suggested the government consider pro rata refund on the basis of the discovered price (of the spectrum when auctioned). In this case, BSNL will get Rs 5,203 crore and MTNL will get Rs 3,518 crore, if the reference date is January 31, 2013. The companies will also get interest payment on the refunded amount.

Under the other option, the GoM has suggested pro rata refund be also considered on the basis of the reserve price. In this case, BSNL would receive Rs 6,531 crore and MTNL will get Rs 4,462 crore, if the reference date is January 31, 2013. There will be interest payment on the refunded amount.

Further, the GoM has suggested ways to pay, in cash or otherwise. For MTNL, it may consider taking over the debt, which does not involve any immediate cash outgo. Till April 1, 2014, MTNL’s dues are Rs 8,477 crore, excluding the overdraft and cash credit drawals. MTNL has long-term loans of Rs 6,172 crore, long-term debt with sovereign gurantee of Rs 1,005 crore and short-term loans with public sector banks amounting to Rs 1,300 crore.

For BSNL, the government could consider offering an exemption from payment of licence fee and spectrum charges amounting to Rs 8,930 crore for 2013-14 to 2015-16, and Rs 1,149 crore for MTNL. BSNL also has long-term debt with public sector banks amounting to Rs 2,561 crore.

In its earlier discussion, the GoM had proposed to revive BSNL and MTNL by waiving the one-time fee the two telcos needed to pay for retaining additional spectrum beyond 4.4M Hz in GSM and 2.5 MHz in CDMA. This would give a burden of Rs 12,000 crore to the exchequer.