Bharat Sanchar Nigam Ltd, the state-owned telecom operator, is likely to take loans of around Rs 6,100 cr this year, on top of the Rs 6,500 cr it took in the year ended March.
According to the ministry of communications, BSNL has sought permission to borrow Rs 3,306 cr from the market to buy equipment and other capital expenditure in the current financial year.
On top of that, the company — which has been facing a cash crunch in recent months that affected salary disbursements — has been allowed to borrow Rs 2,800 cr till July 31 to meet its running expenses.
In March this year, the government had allowed BSNL to borrow Rs 4,300 cr to pay for the equipment and other capital expenses incurred in the year ended March 2019.
This year, it wants to borrow Rs 3,306 cr for the same purpose, but the government is yet to give its approval for the same.
However, the government has given its approval to borrow up to Rs 2,800 cr for meeting the day-to-day operating expenses, such as paying employees’ salaries.
Last year, the government had allowed BSNL to borrow up to Rs 5,000 cr for meeting operating expenditure, but the PSU needed to borrow only Rs 2,200. As such, the government has allowed BSNL to borrow the remaining Rs 2,800 cr by July 31 to meet operating requirements.
BSNL’s finances have been torpedoed by cut-throat competition in the wireless market in India due to the entry of Mukesh Ambani-led Reliance Jio, which uses highly efficient 4G technology to undercut the old and expensive technologies of other players.
Amabi’s re-entry into the field has pushed all other operators into losses, and has even led to the bankruptcy of three — Reliance Communications, Aircel Cellular and Videocon.
For BSNL, which was already making losses before Jio entered the field, the ultra-low-cost 4G services from Jio are threatening to be a death-blow.
The state-owned company was one of the first to get 4G airwaves, back in 2010, but managed to launch its first 4G service only this year.
BSNL operates about 6,000 4G base stations currently, compared to an estimated 6 lakh base stations operated by Reliance Jio.
Because of the migration of subscribers and spending to other operators, BSNL’s revenue has taken a knock in the last two years, pushing it deeper into the red.
For the year ended March, the company posted an eye-watering loss of Rs 7,714 cr. In the year before that (2017-18), it had posted a loss of Rs 7,993 cr, and a loss of Rs 4,793 cr in the year before that (2016-17).
The government had asked the Indian Institute of Management, Ahmedabad — India’s top business school — to suggest ways of improving BSNL’s fortunes.
“Pursuant to their recommendations and approval of respective Boards, a comprehensive revival plan for BSNL and MTNL is under preparation,” it said.
The revival plan includes an infusion of new 4G-suitable spectrum into the companies, the government added. It did not say whether the plan would involve investing public funds into the company.
A total of 1,63,902 employees including 46,597 officer category and 1,17,305 non-officer category employees are working in BSNL.