BSNL, MTNL to spend Rs 11,000 cr to build infrastructure for 4G services

Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL), under the recently announced revival package, will invest around Rs 11,000 crore to build infrastructure for fourth generation (4G) services. 

The asset monetisation exercise in the first phase will help BSNL shave off its Rs 14,000-crore debt. “Those investments (for 4G spectrum infrastructure) will come internally and over the next couple of years or so, an official said. 

The government, on Wednesday, announced a relief package for the two beleaguered companies, which includes allotment of 4G spectrum worth Rs 14,115 crore in lieu of equity shares.  Real estate assets worth Rs 38,000 crore have been shortlisted for monetisation. The assets include land as well as rental and leasing of buildings. MTNL has around 29 retail outlets in Delhi alone.

The Cabinet has approved a relief package worth over Rs 70,000 crore for the two sick units and also merge the two entities. The government has said that these firms are strategically important and will not be closed down or disinvested.  Recent reports had suggested that some key ministries were of the view that revival of BSNL and MTNL was not feasible, and that they could be shut down.

The relief package includes a sovereign bond issue worth Rs 15,000 crore, to be serviced by the two telecom companies. Also, BSNL and MTNL will be allotted 4G spectrum at an administered price, pegged at the 2016 auction value.  

The two companies would be allotted 4G spectrum worth Rs 20,140 crore, Rs 29,937 crore for VRS covering 50 per cent of their employees and Rs 3,674 crore for goods and services tax (GST) that will be levied on allocation of radiowaves. Details of the VRS scheme will be finalised by the two companies. The ex-gratia component of VRS, to be offered to employees aged 50 years and above, will require Rs 17,169-crore budgetary support. Another Rs 12,768 crore will be towards  preponement of pensionary benefit.

Giving an instance of how the scheme will work, Telecom Minister Ravi Shankar Prasad said, "The VRS package approved by the Cabinet will give eligible employees 125 per cent of the income they would have earned by serving the company till the age of 60 years.’’ The minister said, ‘’with this decision, we have taken care of the interest of lakhs of employees of these PSUs." 

BSNL has around 1,59,000 employees and MTNL workforce is at 22,000.