DoT moots Rs 500 bn revival deal for BSNL, MTNL: Source

NEW DELHI: The Department of Telecommunications has proposed a 500-bln-rupee package to revive state-owned telecom companies Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), a senior finance ministry official said. In a Cabinet note, the department has sought Rs 500 billion over a 10-year period for a voluntary retirement scheme, 4G spectrum, and working capital, the official said. "It's up to the Cabinet to decide when to take up the proposal," the official told Cogencis.

Of the Rs 500 bn, the department has sought Rs 250 bn for implementation of a voluntary retirement scheme, and for allocation of 4G spectrum to both the companies, the official said. The rest will be in the form of servicing bonds issued by the two companies for working capital needs, the official said. The revival plan has the backing of the Prime Minister's Office, which had earlier rejected a plan to merge the two companies, the official said.

The finance ministry has expressed its reservation on the revival plan, which is part of the detailed Cabinet note. "Our reservations are primarily on two counts. Firstly, the Centre is running on a very tight fiscal rope and to shell out more money will be difficult. Secondly, both the companies are sort of white elephants. We don't see much chance of revival even if the money is granted," the official said.

Besides direct fund infusion, the revival package has also suggested raising funds through monetisation of surplus land held by the two companies. The government has been looking at ways to reduce the financial stress of the two telecom companies and provide them the next generation of frequencies, the absence of which has hurt their revenues.

According to officials at the Department of Telecommunications, the retirement scheme would cost around Rs 60 bn for BSNL and Rs 20 bn for MTNL. The cost for the allocation of 4G spectrum to BSNL is around Rs 140 bn and Rs 60 bn for MTNL. BSNL and MTNL have employee strength of about 163,000 and 25,000, respectively. Both the companies have been making losses since 2009-10.

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