Govt to buy back BSNL, MTNL spectrum for Rs11,260 cr

The union cabinet on Thursday approved a proposal under which the two state-run telecommunication carriers, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), will return their 4G radio spectrum and get a refund of their upfront payment totalling Rs11,260 crore, which will help the loss-making companies shore up their books.

The government will refund Rs6,724 crore to BSNL and Rs4,534 crore to MTNL in a staggered manner, information and broadcasting minister Manish Tewari told reporters after a cabinet meeting.

The two state-run companies had received the spectrum in 2010, bypassing the bidding process. But despite this huge head-start, they have been unable to successfully launch services.

''The objective of this decision is to provide financial support to the extent of one-time upfront charges paid for broadband spectrum for six service areas of BSNL and both service areas of MTNL on surrender of the spectrum,'' according to an official statement.

''The refund will be made to ensure support for the revival and revitalisation of BSNL and MTNL in the competitive telecom sector. It shall also help these PSUs to arrange finances to meet basic financial commitments such as operation and maintenance of their telecom network,'' the statement added.

Both companies had tried to offer broadband services using this spectrum but were not able to find a profitable business model. The companies had roped in private players as franchisees but the contracts were withdrawn after alleged irregularities.