BSNL's revival bet depends on monetising real estate worth Rs 75,000 crore

The revival of state-owned Bharat Sanchar Nigam Ltd (BSNL) could be contingent on the monetisation of its real estate, valued roughly at Rs 75,000 crore, according to sources involved in the process.

They point out that the monetisation could bring in the cash needed to finance the Voluntary Retirement Scheme (VRS) which requires between Rs 30,000crore and Rs 40,000 crore. 

Estimates suggest that the BSNL’s salary costs may constitute a staggering 75 per cent of BSNL’s total revenue. No revival plan can succeed until this bloated employee base and attendant high cost of operations is dealt with.  

“A decision has to be taken on how much real estate needs to be monetised. While a conservative value of the real estate is Rs 75,000 crore, it could be much more. This will be able to finance the VRS scheme, which is absolutely essential, and also fund the 4G network deployment. There is also a need to quickly look at monetisation of the fibre and towers, as all other telcos are doing,” said a source who has been involved with the revival plan.

BSNL owns over 66,000 telecom towers as well as 800,000 route kilometres of fibre infrastructure across the country, the largest in the telecom sector. With competitors such as Reliance Jio, Vodafone-Idea, and Airtel spinning off these businesses into separate entities, experts say there is no reason why BSNL should not monetize the land it owns to raise money. 

BSNL’s plan is for a VRS for employees above 50 and a reduction in the retirement age to 58. The data as of March 31st, 2019 shows a total of 163,000 employees, including 46,597 executives. The company has run up losses of around Rs 14,000 crore in FY19, up from Rs 4,859 crore in FY15-16 and from Rs 7,993 crore in FY18. 

Its revenues have declined steadily, falling to Rs 31,000 crore in FY17 and are expected to fall further to Rs 19,308 crore in FY19. 

BSNL has blamed the fierce price war in the market, as well as the lack of 4G spectrum, for this financial mess.

When it recently submitted a revival plan to the Prime Minister’s Office, it received a lukewarm response because it lacked a clear roadmap to recovery. What the company demanded was allotment of 4G spectrum which it currently does not have and which it believes is the key reason for losing market share and customers. It also sought permission for land monetization and guarantees for floating bonds to raise money for the VRS scheme. Its plan for a merger with MTNL was not given the green signal. BSNL has been asked to come back with a revised revival plan.