Press "Enter" to skip to content

BSNL won’t be profitable in another 2 yrs, although VRS will save Rs 10,000 cr/yr: MPs’ panel – ThePrint

Signage for BSNL atop the company’s head office in the Churchgate area of Mumbai | Photo: Dhiraj Singh | Bloomberg File Photo

Text Size:

New Delhi: The Bharat Sanchar Nigam Limited (BSNL) won’t be profitable for another two years, despite saving nearly Rs 10,000 crore annually with employees opting for voluntary retirement, a parliamentary standing committee has noted in its report. 

“The expenditure of BSNL has reduced from Rs. 34,400 crore per annum to Rs. 24,687 crore per annum (Annualized value of 9 months figures) mainly due to savings in employee benefits expense, due to VRS [Voluntary Retirement Scheme] as part of revival package,” the Parliamentary Standing Committee on Information Technology said in its report tabled in the Lok Sabha and the Rajya Sabha on 10 March.

According to the report, based on presentations from the telecom department, BSNL is now “EBITDA positive” and yet, only “expects to be profitable from FY 2023-24 onwards”.

EBITDA or Earnings Before Interest, Taxes, Depreciation, and Amortization is an accounting metric that is used to measure the overall financial performance of a company.

The report said the government-owned telecommunication company’s revenue has not grown “mainly” because it is currently not a 4G service provider, and because expected “monetization of land assets” has not taken place.

Even the likelihood of reaching profitability by 2023-24 is “subject to full realisation of the revenue and cash flow from services as well as monetization of land assets as envisaged at the stage of processing of the revival package,” it noted.

The report said the committee had asked the telecom department why 4G spectrum had not been allocated to BSNL or its other PSU, MTNL, in 2020-21 itself. In reply, Telecom Secretary Anshu Prakash told the panel that a tender for telecom equipment providers to provide 4G equipment to BSNL had been issued so the company could start 4G services but the department cancelled it later because it wanted to “encourage BSNL as a vehicle for Indian telecom equipment”, according to the report.

Quoting Prakash, the report said: “As on date, there is not a single Indian company which can give them [BSNL/MTNL] the equipment of 4G which can be used for vast networks. So, what BSNL has done is that, on 1st January, they have floated a fresh tender in which there will be a proof of concept which will be a substitute for experience. Leading companies like TCS, Tech Mahindra, Sterlite, and L&T have purchased documents for the proof of concept. BSNL had nearly 1600 queries after the pre-bid meeting, which will be answered shortly.”

The telecom secretary also said spectrum is allotted for a 20-year period and it is “in the interest of BSNL and MTNL” to start once they have the 4G equipment and are more prepared to use the spectrum. Else, the PSUs will be paying for unutilised spectrum, the committee was told.

Prakash added that BSNL and MTNL will now get the spectrum in “June-July”, in fiscal 2021-22.

Also read: Why the ongoing spectrum auction is different from the last round 5 years ago

Asset monetisation 

The standing committee’s report says the land and building assets of BSNL and MTNL identified for monetisation are worth Rs 67,837 crore and Rs 17,985 crore, respectively.

However, the expected revenue from “monetization of land/building assets of BSNL and MTNL for year 2021-22 is Rs. 1200 crore and Rs. 300 crore respectively”, it adds.

Explaining this comparatively low level of monetisation compared to asset value, the telecom secretary is quoted in the report as saying: “During this past one-year period, monetisation was a problem…Land prices have fallen. Rentals have fallen.”

Prakash maintained that the realty market has taken “some kind of beating during this time”, but he also said “we did not test the market” to gauge its appetite.

There were further delays during the Covid-induced lockdown, he told the committee. “The International Property Consultants, unlike Government where we were in office virtually every day… just did not make the site visits because they were working from home. Eventually, we have to actually coax and coerce them, and give them transport so that they could give their reports.”

According to his estimates, there are five properties that are ready to be auctioned. “This year is going to be very critical for us because we hope to monetize more properties,” Prakash was quoted as saying in the report.

The telecom secretary also shared information on the amount of money BSNL earns from its core assets that are fibre and tower.

BSNL has 68,000 towers, of which 13,000 earn over Rs 1,000 crore per annum in rent, on a gross basis. Besides, it earns about Rs 400 crore per annum by allowing others to use its fibre.

Also read: Reliance Jio emerges biggest bidder for telecom spectrum as it buys 73% of airwaves sold

Subscribe to our channels on YouTube & Telegram

Why news media is in crisis & How you can fix it

India needs free, fair, non-hyphenated and questioning journalism even more as it faces multiple crises.

But the news media is in a crisis of its own. There have been brutal layoffs and pay-cuts. The best of journalism is shrinking, yielding to crude prime-time spectacle.

ThePrint has the finest young reporters, columnists and editors working for it. Sustaining journalism of this quality needs smart and thinking people like you to pay for it. Whether you live in India or overseas, you can do it here.

Support Our Journalism