Government Plans Rs. 39,000 Crore Capital Infusion in BSNL, MTNL Over Five Years

Acknowledging that both BSNL and MTNL are currently in financial distress, the government said on Friday that it is "quite serious" to restore the health of the two telecom services providers by adopting various measures like a whopping Rs. 39,458 crore fresh investment over five years.

"Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) are in financial distress. BSNL and MTNL are faced with declining revenues from loss of market share, increasing expenditure and inability of invest in expansion of communications network," Communications Minister Ravi Shankar Prasad said in Rajya Sabha during Question Hour.

Responding to a question on the performance of the two PSUs, he said,"The Government is quite serious to improve the health of the two bodies." He also said the government was"conscious" of the performance of the two firms which needs "substantial improvement".

He said government proposed to invest Rs. 39,458 crore to bring the health of the two back over the next five years.

BSNL's market share of mobile subscriber base has dipped to 10.95 percent, as on May 2014, from 14.87 percent in March, 2009. During the same period, MTNL's market share has come down to 4.83 percent from 10.87 percent.

"The decline in landline connections and in market share of mobile subscriber base in BSNL has been sharp over the last five years whereas in MTNL, the decline in market share of mobile subscriber base over the last five years has been severe," he said.

Revenue from operations of BSNL and MTNL have dropped by 11.67 percent and 23.87 percent respectively over the past three years.

(Also See: BSNL and MTNL Face Total Debt of Over Rs. 21,000 Crore)

BSNL has been incurring losses for the last five years and it touched Rs. 7,085 crore in 2013-14. MTNL has been incurring losses for the last four years with losses touching Rs. 5,321 crore in 2012-13.

However, MTNL reported Rs. 7,825 crore profit in 2013-14 mainly due to write back of provisions on account of pensionary liabilities and spectrum amortisation costs.

Government has taken different measures such as waiver of Rs. 1,411 crore government loan to BSNL. It has also accorded financial support to the tune of Rs. 6,724.51 crore to BSNL and Rs. 4,533.97 crore to MTNL on surrender of Broadband Wireless Access (BWA) spectrum, he said.