BSNL seeks Rs 4,000-cr subsidy to meet operational costs

Cash strapped state-run BSNL has sought Rs 4,000 crore subsidy from Department of Telecom (DoT) for the current fiscal year to meet its operational costs.

"We have asked Rs 4,000 crore subsidy for FY'11-12 from the DoT to run our commercially unviable services. BSNL is providing large chunk of rural services under social obligation which are not commercially viable for us. We are asking subsidies for supporting our non-commercially-viable services," a BSNL source said.

BSNL provides all telecom services -- fixed line, mobile, STD, ISD, broadband, Internet and others -- in 20 circles. The huge workforce has been eating into the revenues of the company, resulting in huge outflow of cash from the PSU's revenues. BSNL has a workforce of about 3,57,000 personnel.

Out of the 100% revenues of the BSNL, more than 60% goes in paying salaries, and the rest 40% the company has to meet statutory expenditures like spectrum fee, licence fee, services taxes also have to pay day-to-day operation expenditure or OPEX expenditure, the source added.

BSNL's current subsidy period will end in July this year, further, the source added, "These services will not be provided by any operator because it cannot be sustained, but at the same time government has to do it. The Government has to provide telecom service at remotest village (Ladakh or northeast)."

BSNL, once the country's flagship telecom company, posted a net loss of Rs 1,823 crore on revenues of Rs 32,046 crore in 2009-2010. The company had net profit of over Rs 10,000 crore in 2005-06.

BSNL has been relegated to the fifth place in terms of mobile subscribers after Airtel, Vodafone, Reliance and Tatas from its number two position just a few years ago.

Recently, the Board for Reconstruction of Public Sector Enterprises (BRPSE) had recommended that BSNL should merge with its counterpart MTNL -- a move that will help turn around the loss-making telecom giant.

Both the companies are looking for opportunities to turn in the black once again. As on March 31, 2009, BSNL staff strength was 2,99,840 and MTNL's manpower stood at 44,910.

Earlier, Department of Telecom had identified BSNL as execution body for the National Broadband Plan (NBP) to which telecom regulator Trai had objected.

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.