BSNL asks DoT not to withdraw annual subsidy

Bharat Sanchar Nigam Limited (BSNL) has asked the Department of Telecommunications (DoT) not to withdraw the Rs 20 billion subsidy it receives annually to sustain its loss-making landline business across rural India, say news reports.

The DoT had provisioned this amount annually for three years beginning 2008 from the Universal Service Obligation Fund (USOF), used to support rural telephony.

BSNL’s subsidy ends in July 2011. The operator has claimed it spends over Rs 120 billion every year as operating expenses on its rural landline business and earns barely a fraction of that as rental revenues. According to company officials, the cost-revenue mismatch triggers annual losses in excess of Rs 100 billion from the rural landline business alone, worsening its financial state.