DoT mulling annual subsidy for BSNL, MTNL

9 Mar 2011

India’s Department of Telecommunications (DoT) is planning to support the country’s two economically-challenged state-owned telecoms operators with an annual subsidy of INR30 billion (USD655 million), the Business Standard reports. It is believed that both Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) will benefit from the additional funding, with the former given help towards supporting its operations in remote and rural regions from the country’s Universal Service Obligation Fund (USOF). MTNL meanwhile will use the extra money it is handed to cover higher pension and retirement payouts. With initial estimates by the DoT that BSNL is currently incurring a loss of between INR20 billion and INR25 billion from its landline business, the regulator has called on the telco to specify what level of losses its attributes to its social telephony obligations before it finalises any plans for additional funding.

As previously reported by CommsUpdate, the financial struggles of the two operators has also seen the DoT revive a proposal to merge the duo, with it thought that such a move could synergise the two operators’ business operations across the country. Last month the regulator noted in its draft strategic plan: ‘The structure of BSNL and MTNL make it difficult for them to be accountable for their performance. [The] DoT should set up a multi stakeholder committee to develop a restructuring plan for both firms.’ Such a committee, it is suggested, would have members from a combination of public enterprises, the DoT and the department of IT and ministry of finance.