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BSNL seeks fresh Rs 37,000 crore from govt, says additional funds needed for capex and servicing debt

“For the deployment of India 4G core and associated transmission network expansion and fiberisation, BSNL will be requiring capital expenditure of approximately Rs 5,000 crore in current fiscal, Rs 7,500 crore in FY22-23 and Rs 5,000 crore in FY23-24,” the CMD has said in his letter to the DoT secretary.

The government also provided a sovereign guarantee to BSNL and MTNL to raise up to Rs 15,000 crore through long-term bonds. This was to be used for restructuring their existing debt and also partly meet their capex, opex, and other requirements.
The government also provided a sovereign guarantee to BSNL and MTNL to raise up to Rs 15,000 crore through long-term bonds. This was to be used for restructuring their existing debt and also partly meet their capex, opex, and other requirements.

After receiving a bailout package of nearly Rs 70,000 crore in October 2019, state-owned Bharat Sanchar Nigam (BSNL) has again sought Rs 37,105 crore from the government either as a grant or equity.

The company’s chairman and managing director, PK Purwar, has written to the Department of Telecommunications secretary that the company will be requiring capital expenditure of Rs 17,500 crore between the current fiscal and FY24. Further, it needs Rs 19,605 crore during this period for servicing its debt obligations.

Making out a case for the need for additional funds from the government, BSNL said after the revival package, which was provided in October 2019, the company has taken several initiatives to increase revenue and reduce costs and became Ebitda positive in FY21, but is facing challenges in capex and debt servicing obligations.

The CMD wrote that BSNL’s revenues have stagnated due to the hyper-competitive telecom market and absence of 4G services. “Due to policy of preference to Make in India (PMI) under the Atmanirbhar Bharat initiative of government, 4G services in BSNL will be launched through Indian core for which proof-of-concept (PoC) is being conducted for indigenous technology,” Purwar said.

He said to roll out the 4G network, BSNL plans to install 1 lakh indigenously developed sites, which will require Rs 12,500 crore, and Rs 5,000 crore is required for transmission network equipment, fiberisation, IT systems and other infrastructure to deliver quality services to customers.

“For the deployment of India 4G core and associated transmission network expansion and fiberisation, BSNL will be requiring capital expenditure of approximately Rs 5,000 crore in current fiscal, Rs 7,500 crore in FY22-23 and Rs 5,000 crore in FY23-24,” the CMD has said in his letter to the DoT secretary.

Talking about the measures taken after the government’s revival package, the CMD said revenues have stabilised and there’s been a reduction of nearly Rs 2,500 crore in administrative and operating expanses in the last two years. The successful implementation of voluntary retirement scheme (VRS) has resulted in savings of Rs 7,000 crore in employee costs and reduction in manpower by 78,500.

Of the Rs 70,000-crore revival package for BSNL and MTNL approved by the government in October 2019, the biggest chunk of Rs 29,937 crore, was towards VRS for employees above 50 years of age. The amount included Rs 17,169 crore ex-gratia amount and Rs 12,768 crore towards pension, gratuity, and commutation.

The government also provided Rs 23,814 crore towards administrative allocation of 4G spectrum to these firms. This means that unlike the private telecom operators, BSNL will not have to pay auction-determined price for 4G spectrum.

The government also provided a sovereign guarantee to BSNL and MTNL to raise up to Rs 15,000 crore through long-term bonds. This was to be used for restructuring their existing debt and also partly meet their capex, opex, and other requirements.

The two PSUs are also supposed to monetise their assets like land, etc, worth Rs 38,000 crore over a period of four years.

In FY21, BSNL’s total income stood at Rs 18,595 crore, which was down 2% year-on-year. However, the company was able to narrow its losses to Rs 7,441 crore from Rs 15,499 crore in FY20. This was largely due to reduction in staff related expenses.

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