BSNL, MTNL will not be profitable for another two years despite saving Rs 100 billion annually, says parliamentary committee on IT

According to a report by the parliamentary standing committee on IT, Bharat Sanchar Nigam Limited (BSNL) will not be profitable for another two years, despite saving nearly Rs 100 billion annually.

The expenditure of BSNL has reduced from Rs 344 billion per annum to Rs 246 billion per annum (annualised value of nine months figures) mainly due to savings in employee benefits expense, due to voluntary retirement scheme (VRS) as part of revival package, the Committee said in its report tabled in the Lok Sabha and the Rajya Sabha.

The report added that BSNL’s revenue has not grown mainly because it is currently not a 4G service provider, and because expected monetisation of land assets has not taken place.

Earlier, THE Department of Telecommunications (DoT) in a report had said that BSNL has turned earnings before interest, taxes, depreciation, and amortisation (EBITDA) positive for the first six months of the current fiscal year. However, the parliamentary standing committee on IT, highlighted that the BSNL is expected to be profitable from financial year (FY) 2023-24 onwards. 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 monetisation of land assets as envisaged at the stage of processing of the revival package, it noted.

The report also questioned DoT as to why 4G spectrum had not been allocated to BSNL or Mahanagar Telephone Nigam Limited (MTNL).In response to this, telecom secretary Anshu Prakash said that the tender initially floated for telecom equipment procurement had been canceled as the telecom department intended to encourage BSNL as a vehicle for Indian telecom equipment. 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 January 1, 2021, 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 1,600 queries after the pre-bid meeting, which will be answered shortly.”

Further, Prakash said that spectrum has been allocated for a 20-year period in the interest of the two telcos so that they are able to provide 4G services once they have the 4G equipment, and added that spectrum will now be provided in June-July, in FY 2021-22.