The Department of Telecom has floated a proposal to give financial aid to Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, to fund their one-time spectrum fee. While the exact nature of the aid is yet to be finalised, the DoT has mooted a proposal to give the aid either in the form of a special grant or fresh equity.
In a note prepared for the consideration of the Empowered Group of Ministers, the DoT has argued that support should be given to the two telecom PSUs, given their current financial position and their strategic importance. DoT will discuss with the Finance Minister to arrive at a final package for the two PSUs over the next 3 months.
Pay out
BSNL and MTNL had written to the telecom ministry seeking a bailout package to fund their one-time spectrum fee. The two telecom companies are facing a pay out of about Rs 10,000 crore, after an Empowered Group of Ministers decided to impose a fee on incumbent players with excess spectrum. In addition, they also have to bear a huge cost for re-farming 900 Mhz spectrum band as proposed by the EGoM. The EGoM has decided to collect a levy from all operators with more than 4.4 Mhz of GSM spectrum and 2.5 Mhz of CDMA spectrum. Both BSNL and MTNL have excess GSM spectrum in all the circles they operate in.
“Due to the present financial conditions BSNL is not in a position to pay any additional amount for retention even though the spectrum is essential to serve its customers,” BSNL’s Chairman and Managing Director, R. K. Upadhyay, had writen in a letter to the Secretary of the Department of Telecom.
In a similar letter, MTNL’s Chairman & Managing Director, A. K. Garg, said, “it is therefore requested that the fee for retention may be borne by the Government.”
However, it is not clear how the Government can offer to help the two PSUs with the private operators also clamouring for similar package. While the impact of the EGoM’s decision is largest on BSNL and MTNL, private players like Airtel and Reliance Communications have to cough up around Rs 4,000 crore each. Private companies have also written to the Government to shelve the plan to charge the one-time fee.