GoM suggests refunds for MTNL, BSNL

7 Aug 2013

The Group of Ministers (GoM) investigating a potential revival strategy for debt-laden state-backed telcos Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL) has proposed three possible ways for the government to refund the amount paid for broadband wireless access (BWA) spectrum, once the pair return the frequencies, the Business Standard writes. BSNL and MTNL paid INR67.25 billion and INR45.34 billion (USD1.09 billion and USD735.62 million) respectively for the 2500MHz concessions.

Under the first solution, the GoM proposed a refund for the full amount to both companies, whilst the second offer suggests a pro rata refund based on the value of the spectrum, discovered when it was auctioned. In the latter case, BSNL would be refunded to the tune of INR52.03 billion and MTNL and would receive a payout of INR35.18 billion. Finally, the third proposal offered a pro rata refund based on the reserve price of the spectrum, which would see BSNL and MTNL refunded INR65.31 billion and INR45.34 billion respectively.

The GoM also considered ways to pay the refund, suggesting that the government take over part or all of the debt burden of MTNL, which owes in excess of INR100 billion (INR61.72 billion in long-term loans, INR10.05 billion in long-term loans with sovereign guarantees and INR13.00 billion in short-term loans from public sector banks). For BSNL, however, the GoM suggested exempting the telco from licence fee and spectrum fee charges, amounting to INR89.30 billion for the three years from April 2013 to March 2016.