FinMin spikes BSNL revival plan; no VRS, free 4G spectrum: report

The union finance ministry has rejected the Nripendra Misra committee report on plans to revive state-owned telecom operators BSNL and MTNL, including plans for a Rs 8,500 cr VRS package and ‘free’ 4G spectrum, Malayalam newspaper Mathrubhumi reported, quoting sources.

The report, if correct, would make the condition of the state-owned telecom player precarious as the company is running on borrowed time and borrowed funds.

The report comes in the middle of a sharp slowdown in the overall economy that has forced the government to divert funds to repairing priority sectors like exports and manufacturing.

The plan prepared by a committee headed by former TRAI chairman and former Principal Secretary to the PM Nripendra Misra was last discussed by a group of ministers in July. The group included finance minister Nirmala Sitharaman, Home Minister Amit Shah and IT and Law Minister Ravi Shankar Prasad.

The July meeting had been inconclusive.

According to the news report, Finance Ministry is supposed to have expressed difficulties in finding the funds to implement the revival plan suggested for BSNL and MTNL due to paucity of funds.

Instead, Finance Ministry is reported to have asked for a new plan.

Besides increasing expenditure to counter the impacts of the economic slowdown, government has also been hit by a decline in tax revenues due to slowing consumption and investment.

It is not clear whether the committee’s plan suggested direct government funding of these requirements, or an indirect funding by allowing BSNL to raise this money in the form of debt or bonds with government guarantee.

The revival plan emphasized two points — reducing the employee strength of the two companies, and entering the high-speed data market by launching better 4G services.

To enable the launch of more competitive 4G services, the Nripendra Misra commission recommended that the BSNL be given money that can then be paid back to the government in return for 4G airwaves. BSNL has been asking government, as its owner, to invest more money in the form equity so that the company can continue to compete in the market.

However, the finance ministry opposed this idea and said BSNL should find the money for 4G spectrum on its own, the newspaper report said.

Meanwhile, BSNL has been finding it tough to find money to keep paying salaries to its 1.6 lakh employees.

The company is likely to take loans of around Rs 6,100 cr in the current year, slightly less than the Rs 6,500 cr it took last year.

BSNL has sought permission to borrow Rs 3,306 cr from the market to buy equipment and other capital expenditure in the current financial year.

On top of that, the company — which has been facing a cash crunch in recent months that affected salary disbursements — has been allowed to borrow Rs 2,800 cr till July 31 to meet its running expenses.