The company needs a working capital of Rs 10,000-11,000 crore a year. We may look at raising about 35-40% (about Rs 5,000 crore) of the proposed capex plan. The rest would be arranged through internal accruals, a senior executive of the company said.
The telco would use the funds for buying equipment, upgradation of network and roll-outs of 3G and BWA services. Analysts say the telco's ability to raise funds is not so much of a concern as to execute 3G and BWA services.
The debt to equity ratio is just 1 and, therefore, raising funds for BSNL would not be a concern. However, there are execution concerns, especially when the operator is not able to deliver services even after having the 3G spectrum, a research analyst said.
There is also a possibility that the company would reconsider its capex and scale it down, but details of this could not be asceratined as it is still in the planning stage. Since we are re-looking at the overall capex plan, we would want to wait till December and then raise the required capital. This could be through short-term and long-term loans, the source said. During 2009-10, we spent about Rs 10,000 crore on capex, the source added. BSNL has paid the department of telecommunications (DoT) about Rs 18,499 crore as spectrum fee for 3G (Rs 10,186 crore) and BWA (Rs 8,313 crore) and have requested for the money to be paid back to the company. However, the telco is not expecting the refund anytime soon, source stated. We are not so sure about the mode of repayment. Also, the fund raising would depend on the overall revenues we are able to generate during the year, the source added.
In a recent communication to the DoT, the firm had said the operational losses incurred by the telco during the year 2008-09 was about Rs 15,873 crore, which was on the back of its basic services in rural areas and for providing the telegraph services. The firm had, therefore, sought compensation for these losses from the Universal Service Obligation Fund (USOF). On July 31, the telco reported a top line of Rs 32,045 crore for the FY10, which is about 10.4% less, as compared to a year ago. This was on account of drastic reduction in tariff, fierce competition as well as decline in fixed wire line connection due to preference of the subscribers for mobile, the firm said.