BSNL seeks immediate cash infusion from government as it finds it 'nearly impossible' to continue operations

State-run telecom firm BSNL has sought an immediate cash infusion from the government as it is finding it "nearly impossible” to continue operations, a media report said.

According to The Times of India, a senior general manager at BSNL’s corporate budget and banking division, in a letter to the joint secretary in the telecom ministry, said that the gap between monthly revenues and bare expenses to continue operations as a going concern has reached a level where continuing with operations would be nearly impossible without immediate infusion of adequate equity.

The letter further said that it has become impossible to manage Rs 850 crore salary liability for June as outstanding liabilities of nearly Rs 13,000 crore have made it's business “unsustainable”.

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Citing lower debt and a continuous increase in market share, an association comprising engineers and account professionals at BSNL has sought Prime Minister Narendra Modi's intervention for the revival of the state-run firm.

Representational image. Reuters

The All India Graduate Engineers and Telecom Officers Association (AIGETOA) in a letter dated 18 June urged the Prime Minister to provide budgetary support to BSNL to help address liquidity crunch that is adversely impacting operation and maintenance of services at the organisation.

Both state-run telecom firms BSNL and MTNL have been reporting losses since the time they were asked to pay auction determined spectrum price in 2010 for all the circles where they operate.

In order to bring in healthy cash flows to meet BSNL's capital and operational expenses, the Department of Telecommunications (DoT) is planning to lease out the state-run telco's fibre-based network spread over 8 lakh route km, The Economic Times reported last week.

Citing a person familiar with the matter, the news report said that the department is also expected to engage in exploratory discussions with the London and New York-based fund managers, according to a person aware of the matter.

In April, the Prime Minister's Office (PMO) had in principle agreed to bail out state-owned telecom firms MTNL and BSNL. The PMO, in a meeting with telecom and finance ministries and Niti Ayog, had asked the department of telecom (DoT) to make a plan for allocating the firms 4G spectrum, grant them immediate financial aid and frame a voluntary retirement scheme for employees.

The PSUs have been also ailing because of high revenue-to-debt ratio due to a high number of government employees that were transferred by the Department of Telecom to them at the time of their formation. BSNL has 1.76 lakh employees across India and MTNL has 22,000 employees.

With PTI inputs