BSNL, MTNL won’t be profitable for another two years, IT panel

The Bharat Sanchar Nigam Limited (BSNL) won’t be profitable for another two years, despite saving nearly Rs 10,000 crore annually with employees opting for voluntary retirement, a parliamentary standing committee has noted in its report.

“The expenditure of BSNL has reduced from Rs. 34,400 crore per annum to Rs. 24,687 crore per annum (Annualized value of 9 months figures) mainly due to savings in employee benefits expense, due to VRS [Voluntary Retirement Scheme] as part of revival package,” the Parliamentary Standing Committee on Information Technology said in its report tabled in the Lok Sabha and the Rajya Sabha on 10 March.

According to the report, based on presentations from the telecom department, BSNL is now “EBITDA positive” and yet, only “expects to be profitable from FY 2023-24 onwards”.

EBITDA or Earnings Before Interest, Taxes, Depreciation, and Amortization is an accounting metric that is used to measure the overall financial performance of a company.

The report said the government-owned telecommunication company’s revenue has not grown “mainly” because it is currently not a 4G service provider, and because expected “monetization of land assets” has not taken place.

Even the likelihood of reaching profitability by 2023-24 is “subject to full realisation of the revenue and cash flow from services as well as monetization of land assets as envisaged at the stage of processing of the revival package,” it noted.

The report said the committee had asked the telecom department why 4G spectrum had not been allocated to BSNL or its other PSU, MTNL, in 2020-21 itself. In reply, Telecom Secretary Anshu Prakash told the panel that a tender for telecom equipment providers to provide 4G equipment to BSNL had been issued so the company could start 4G services but the department cancelled it later because it wanted to “encourage BSNL as a vehicle for Indian telecom equipment”, according to the report.

Quoting Prakash, the report said: “As on date, there is not a single Indian company which can give them [BSNL/MTNL] the equipment of 4G which can be used for vast networks. So, what BSNL has done is that, on 1st January, they have floated a fresh tender in which there will be a proof of concept which will be a substitute for experience. Leading companies like TCS, Tech Mahindra, Sterlite, and L&T have purchased documents for the proof of concept. BSNL had nearly 1600 queries after the pre-bid meeting, which will be answered shortly.”

The telecom secretary also said spectrum is allotted for a 20-year period and it is “in the interest of BSNL and MTNL” to start once they have the 4G equipment and are more prepared to use the spectrum. Else, the PSUs will be paying for unutilised spectrum, the committee was told.

Prakash added that BSNL and MTNL will now get the spectrum in “June-July”, in fiscal 2021-22. The Print