Government may ease debt burden of telcos BSNL, MTNL

A group of ministers in charge of reviving state-run telecom companies Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam (MTNL) is considering a taxpayer-funded takeover their entire debt, as well as waiving their licence fees and spectrum charges for three financial years, according to an internal telecom department document.

As on 1 April, MTNL's total debt stood at Rs8,477.35 crore while BSNL's was at Rs2,561.14 crore.

BSNL's licence fee and bandwidth usage charges for the three financial years starting 1 April 2013 and ending 31 March 2016 amounting to Rs8,930 crore and that for MTNL totalling Rs11,149 crore could also be waived as part of the revival package, The Economic Times said citing the document.

The proposals were discussed at 1 August meeting of the ministerial panel and come at a time when both companies inefficiently run and - faced with brutal competition from private operators - have been making huge losses.

The companies were further hurt by the debt they took to pay for wireless broadband spectrum in 2010. While the two companies were given automatic priority for broadband spectrum even before the auctions, they were expected to pay as much as the highest bidder.

The ministers are also considering allowing the two operators to surrender bandwidth in some circles and to refund - totally or on a pro-rata basis - the amount that the two operators had paid for the airwaves.

BSNL, which offers services in 20 of the 22 service areas, paid Rs8,313.80 crore for the bandwidth, while MTNL, which provides services in of Delhi and Mumbai, paid Rs4,533.97 crore.

The proposal before the panel envisages BSNL returning spectrum in Gujarat, Karnataka, Tamil Nadu, Kolkata, Maharashtra and Andhra Pradesh, while retaining the others. MTNL, on its part, would surrender bandwidth in both its service areas.

In case of a full refund, BSNL stands to get Rs6,724.51 crore while MTNL could get Rs4,533.97 crore, the note showed.