BSNL calls for renewal of annual USOF subsidy

15 Mar 2011

State-owned Indian telco Bharat Sanchar Nigam Ltd (BSNL) has called on the Department of Telecommunications (DoT) to maintain the INR20 billion (USD434 million) annual subsidy that it receives from the country’s Universal Service Obligation Fund (USOF). According to the Economic Times, the financially-struggling operator is due to see the subsidy end in July 2011, but has claimed that it spends more than INR12 billion each year providing fixed line voice services to rural regions although it earns only a fraction of that from rental revenues. BSNL executives have suggested that the cost-revenue mismatch is one of the core factors in the company’s recent weak financial position, with the telco reporting its first ever annual net loss in August 2010. ‘It will be impossible for BSNL to sustain its bleeding wireline business across rural India if the USOF subsidy is withdrawn after July. Since losses have mounted and the cost of maintaining our rural telecoms infrastructure has shot up, we have asked the telecom department to renew the support,’ the report cites an unnamed BSNL director as saying. USOF administrator A Bhattacharya meanwhile has stated that any decision to renew subsidy payouts to BSNL will require a policy level change.