Centre working on a fresh bailout package for cash-strapped BSNL

A new plan for revival of Bharat Sanchar Nigam (BSNL) is being readied. 

This is a sequel to the prime minister’s office (PMO) having rejected the earlier proposal to merge it with Mahanagar Telephone Nigam (MTNL), its sick sibling in the sector.

Telecom Minister Ravi Shankar Prasad had said in his first press conference after assuming charge earlier this year that the government would revive BSNL and MTNL. BSNL, it is now proposed, is to prepare an asset monetisation plan. For this, it is learnt, the operations could be split into distinct subsidiary bodies. For instance, separately for optical fibre assets, fixed line services and broadband services, besides real estate assets. 

An official says the government is yet to do a valuation of BSNL’s assets but has assured that this would be at prevalent market rates. Meanwhile, disclosed a senior officer in the department of telecommunications (DoT), they are negotiating with the departments of revenue and economic affairs, plus the NITI Aayog, for a loan guarantee to banks, for enough money to keep the two state-owned entities afloat. The money would be utilised on both capital expenditure and salary payment. BSNL did raise loans in the past to pay salaries. The loans are seen as shot to medium term arrangements before the government finalises a full bailout package.

The previous proposal for merger, felt the PMO, would not suffice to revive the the two companies. 

 

A voluntary retirement package being considered for BSNL, estimated at Rs 6,365 crore. Plus, equity infusion of Rs 6,767 crore towards allotment of pectrum for fourth-generation technology (4G).

BSNL and MTNL had both sought relief from the government in the form of conversion of debt into a sovereign guarantee, a pay revision and  a subsequent voluntary retirement scheme (VRS). BSNL also sought 4G spectrum across India through equity infusion of Rs 7,000 crore. MTNL suggested converting its Rs 20,000 crore of debt into a sovereign one and surrendering its 3G spectrum. 

The proposed VRS package might be funded by a bond issue over 10 years.

About half the 176,000 employees at BSNL are estimated to retire in the next five or six years. For MTNL, the VRS package’s cost is estimated at Rs 2,120 crore. It has 22,000 employees and 16,000 are to retire in the next five or six years.

BSNL’s loss in 2018-19 is estimated at Rs 14,200 crore, with a decline in revenue to Rs 19,308 crore. It lost Rs 4,859 crore in 2015-16, Rs 4,793 crore in 2016-17 and Rs 7,993 crore in 2017-18. It owes Rs 13,000 crore and no bank has lent it money for two years. Overall debt of the telecom sector is estimated at a little over Rs 6 trillion.

While the central government’s overall budgetary allocation for its telecom units has gone down by 15 per cent, that for BSNL and MTNL has gone up for the current financial year. Fundraising of Rs 6,500 crore has been approved for Bharat Broadband Network Ltd. This is for creation of the telecom infrastructure required for broadband connectivity to all 250,000 gram panchayats and on non-discriminatory access to service providers for provisioning of broadband services in rural areas.