DoT mulls Rs 13,000 crore bailout package for debt-ridden BSNL

A woman speaks on her mobile phone in front of the logo of Bharat Sanchar Nigam Ltd (BSNL) painted on a wall outside its office in Kolkata. Photo: Reuters
The Department of Telecommunications (DoT) is considering a Rs 13,000-crore bailout plan for state-owned Bharat Sanchar Nigam Ltd (BSNL), which is struggling to stay afloat amid a precarious debt situation. The proposal includes a voluntary retirement package of Rs 6,365 crore and an equity infusion of Rs 6,767 crore towards the allotment of 4G spectrum. Besides, the ministry is looking at the monetisation of BSNL’s real estate assets.   

“Banks are now reluctant to give even short-term loans to BSNL. The company’s total loss in FY19 is estimated at Rs 7,000 crore, including Rs 4,000-crore operational loss due to depreciation,” a company official said on condition of anonymity.

BSNL has not paid salaries to its employees for the past two months, a first in the company’s history.

The firm’s debt stands at Rs 13,000 crore. The debt-laden company has failed to secure bank loans in the past two years. The overall debt of the telecom sector is estimated at over Rs 6 trillion.

The bailout proposal under consideration of the DoT will require approval from the Digital Communications Commission (DCC), the telecom sector’s topmost decision-making body. The government is of the view that telecom is a strategic sector and public sector presence is a must. With the model code of conduct for the Lok Sabha polls in place, the decision to revive the sick PSU may not come through anytime soon. However, an official told Business Standard that the deliberations were on regarding a revival package as “we cannot let our company sink”.

Revival packages for BSNL and MTNL were discussed in the meeting of the DCC in February. The suggestions by the firms included the conversion of debt into sovereign guarantee, pay revision and subsequent voluntary retirement. BSNL sought 4G spectrum across India through an equity infusion of Rs 7,000 crore. MTNL suggested converting its Rs 20,000 crore debt into sovereign and surrendering 3G spectrum. A voluntary retirement package based on the Gujarat model is in the works and the DoT has proposed that the package should be funded by a bond issue over 10 years, which will bring down cost implications for the government. 

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