BSNL wants to get out of ICU - if govt is willing to let it

BSNL, the public sector telco, has dusted up a revival plan, but a lot depends on whether the government pays its dues and allows it to sell land

Sindhu Bhattacharya August 20, 2012 14:05:16 IST
BSNL wants to get out of ICU - if govt is willing to let it

New Delhi: Public sector telecom firm Bharat Sanchar Nigam Ltd (BSNL) seems to be finally taking all the right steps to trim losses. It has begun the process of monetising its multiple assets, hiving off some businesses and focusing on expansion of the GSM mobile telephony business.

But its owner, which is the government itself, needs to also pitch in by clearly delineating a timeline within which the bleeding company can get back about Rs 6,000 crore by surrendering BWA (broadband wireless) spectrum in some circles. The government has already agreed to its spectrum surrender demand in principle, as it had compelled BSNL to acquire 3G as well as BWA spectrum in all 22 circles in 2010 at the highest auction prices.

BSNL wants to get out of ICU  if govt is willing to let it

The PSU is looking to hive off its tower business as well. Reuters

The telco had to fork out Rs 19,000 crore to acquire this spectrum and while it has no plans to surrender any spectrum for 3G services, it does wants to surrender spectrum in some select BWA circles since it sees no business case for continuing in these geographies.

Speaking to Firstpost, BSNL's Chairman and Managing Director RK Upadhyay listed out several initiatives BSNL is in the process of announcing to improve its finances. But perhaps because he heads a PSU, Upadhyay was hesitant to provide a timeline for either the company's breakeven or for it getting the Rs 6,000 crore by surrendering BWA spectrum.

To begin with, BSNL is planning to appoint a consultant over the next four to five weeks for monetising 10 prime properties it owns in large metros such as Mumbai, Hyderabad, Chennai, and Gurgaon, among others. Upadhyay said this would generate a cash pile without selling off prime land.

"We have plans to rent out these premises. But if the consultant suggests selling some of them off, we will look at that suggestion too," he said.

Then, another consultant is to be appointed for putting the telco's seven factories to good use. These factories are situated in Mumbai, Jabalpur, Richhai, Bhilai, Kolkata, Gopalpur (Kolkata) and Kharagpur. Products manufactured here include SIM cards, optical fibre cable accessories, cellular and microwave towers, etc. Upadhyay said BSNL is looking to lease them out to other manufacturers and develop these factories into separate profit centres.

Similarly, the telco has also decided to hive off its lucrative tower infrastructure business into another company. Upadhyay said BSNL has about 70,000 towers and it will explore various business models that can realise value from this vast infrastructure. A consultant for this hiveoff is also expected to be appointed in the next four to five weeks.

The net loss of BSNL widened to Rs 8,851 crore during 2011-12 against just Rs 1,823 crore two years back in 2009-10. BSNL's profit began declining from 2004-05 - the year in which it reported a whopping Rs 10,183 crore in net profit. During 2010-11, losses rose to Rs 6,384 crore mainly due to hefty outgo on employees' salaries and expenses borne by the PSU for procuring 3G and BWA spectrum.

The moot point: a revival plan is ready. But if implementation - selling of leasing out land and factories - depends on a neta's nod, one has to keep fingers crossed.

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