As state-owned Bharat Sanchar Nigam Ltd struggles to stay afloat amid a precarious debt situation, the Department of Telecommunications (DoT)is considering a bailout package worth over Rs 13,000 crore for the sick public sector unit. The proposal includes a Rs 6365 crore voluntary retirement package and 4G spectrum allotment through Rs 6,767 crore equity infusion and monetisation of real estate assets.
“The banks are now reluctant to even give short term loans to BSNL. The company’s total loss in FY’19 is likely to be Rs 7000 crore, including Rs 4000 crore operational loss due to depreciation,” a company official said on condition of anonymity.
BSNL has not paid salaries to its employees in the last two months, a first in the company’s 18-year long history.
The company’s current debt stands at Rs 13000 crore, while the overall debt of the telecom sector stands at Rs 6.1 trillion.
The proposal under consideration would require approval from the Digital Communications Commission, telecom sector’s top decision-making body. The central government is of the view that telecom is a strategic sector and public sector presence is a must.
The debt-laden firm has failed to secure bank loans in the last two years to even meet its operational expenditure. With the model code of conduct in place the decision to revive the sick PSU may not come through any time soon. However, an official told Business Standard that the deliberations are on regarding the revival package.
The model code of conduct is a set of rules to follow on issues related to speeches, polling day, polling booths, portfolios, content of election manifestos, processions and general conduct. It came into place after the Election Commission announced dates for the general elections. During this period no policy decision that can have an impact on the outcome of elections will be taken by the central government.
The revival package of both the sick PSUs — BSNL and MTNL was discussed in the last meeting of the Digital Communications Commission (DCC), formerly known as Telecom Commission, in February.
BSNL along with state-owned Mahanagar Telephone Nigam Ltd submitted respective revival plans to the government in which they articulated a slew of measures to bring the two companies back on track.
The two cash-strapped companies’ suggestions included conversion of debt into sovereign guarantee, pay revision and subsequent voluntary retirement.
BSNL sought 4G spectrum across India through equity infusion of Rs 7,000 crore. MTNL had suggested converting its Rs 20,000 crore debt into sovereign and surrendering 3G spectrum.
In a desperate plea to salvage the situation, both companies even suggested that if everything else failed the Union government should takeover or dissolve the companies with the condition of absorbing all employees with DoT.
The central government’s structuring plan for both the PSUs expects to address two core issues: employees and debt.
A voluntary retirement package based on the Gujarat model is in the works and DoT has proposed that the package should be funded by a bond issue over 10 years, which will bring down the cost implications for the government.
The monetisation of land assets of MTNL and BSNL : Since DIPAM (Department of Investment and Public Asset Management) has set up an institutional mechanism it should be handled through that institutional mechanism so that it is done in a uniform manner across PSUs.―Business Standard