BSNL financial crisis escalates

24 Jun 2019

A senior official at state-owned telco Bharat Sanchar Nigam Limited (BSNL) has sent an urgent request to the government for a cash infusion to ensure that the company can continue to operate, warning that its various liabilities have made business ‘unsustainable’, the Economic Times writes. Puran Chandra, senior GM at BSNL’s corporate and banking division, said in a letter to the telecoms ministry that ‘the gap between monthly revenues and bare expenses to continue operations as a going concern has reached to a level where continuing with the BSNL operations would be nearly impossible without immediate infusion of adequate equity.’ Revival plans for the loss-making telco have been discussed by the government for several years but have yet to be finalised or put into effect and despite repeated pleas the company has still not received new spectrum for 4G services. Consequently, during a period of rapid industry development – both in terms of technology and commercial practices – BSNL has lacked the funds or resources to keep pace with its privately-owned competitors, causing its financial difficulties to escalate further. The developing crisis has left the company struggling to maintain operations, with the paper stating that BSNL was facing salary payments of INR8.5 billion (USD122 million) for June, whilst creditors and suppliers are finding it increasingly difficult to secure payment from the telco. The paper quotes a spokesperson from one of the company’s suppliers as saying: ‘BSNL just doesn’t pay. It is a task to recover dues’.

In a related development, the Department of Telecommunications (DoT) has unveiled plans to sell off BSNL’s underutilised fibre infrastructure to help raise funds for a voluntary retirement scheme (VRS) that would help reduce the firm’s outgoings. Under the plans, BSNL would utilise a sale and leaseback model to finance its CAPEX, with the assets potentially being pooled with fibre assets from other companies.

India, Bharat Sanchar Nigam Limited (BSNL)