Govt in talks with banks for cash-strapped BSNL's Rs 2,500-crore loan

This will help the company stay afloat till the Centre finalises its revival plan

Bharat Sanchar Nigam Ltd (BSNL) may get a lifeline from the Union government, which is negotiating with banks for a term loan of Rs 2,500 crore to help the company stay afloat till the Centre finalises its revival plan.

It is learnt that the negotiations are on to get favourable repayment conditions.

“The loan will help in meeting the company’s operating expenses, salaries, bill payments, vendor payments, etc,” a person in the know told Business Standard.

Once finalised, it will be enough to keep the company afloat for six months, another official said.

Experts, however, are of the view that Rs 2,500 crore for a company like BSNL is too little. “There is no solution to BSNL’s problems unless its staff is reduced. Monetising its land assets is not simple. The land for setting up telephone exchanges was given by states and land is a state subject. How the government sells that land or the assets needs to be seen,” an expert said.

The company is grappling with losses, delays in salary payment, a huge number of employees, and lack of 4G spectrum. The central government has agreed to release another Rs 850 crore by the end of this month for repaying loans and giving salaries. 

Meanwhile, the Union government will chalk out a revival plan for the debt-laden company.

Both BSNL and Mahanagar Telephone Nigam Ltd (MTNL) sought relief from the government in the form of financial stimulus. The government had assured the two PSUs of revival packages of a certain kind. The proposed package for BSNL includes a Voluntary Retirement Scheme (VRS) of Rs 6,365 crore and an equity infusion of Rs 6,767 crore for allotting 4G spectrum.

About half the 176,000 employees of BSNL are estimated to retire in five-six years. If only about 50 per cent of the eligible employees (those aged about 50 years) opt for the VRS, that would be 40,000 people.

The VRS payout will include 35 days’ salary for each year of service and 25 days’ salary for the remaining years.

For MTNL, the VRS package may have a revenue impact of Rs 2,120 crore. The company has 22,000 employees, of whom 16,000 will retire in five-six years.

The VRS is expected to be funded through issuing 10-year bonds, which will be paid back through lease revenue earned by monetising land assets.

BSNL may get the 4G spectrum it sought in the revival package and it may be allotted liberalised spectrum in the 2100 megahertz band at market prices.

BSNL’s debt is Rs 13,500 crore, while that of the telecom sector is Rs 6.1 trillion.