11 Crore BSNL Users Can Face Disruption After Dec 31 If Rs 3000 Cr Dues Of Nokia, ZTE Are Not Cleared

We have been flooding our stocks fervently with stories of intensified unrest going on in the public sector telecom company, Bharat Sanchar Nagar Limited (BSNL). We have covered stories concerning it frantically.

There were constant reports of BSNL not paying its employees on time. Thus, in an attempt to save about ?7,000 crore annually, the telecom company rolled out its Voluntary Retirement Scheme, 2019 on November 4, to which more than 90,000 employees have applied.

Also, in a revival package, the Union Govt gave a ‘thumbs-up’ for the merger between BSNL ans MTNL, of which have been recording heavy losses since the past 10 years. The total debt on the two firms is around Rs 40,000 crore.

It has recently been reported that foreign gear vendors, like Nokia, ZTE ans UTStarcom have separately written to BSNL and have given the state-run company an ultimatum to clear off its dues of more than Rs 3,000 crore by December 31.

BSNL Receives an Ultimatum Until December 31

Foreign gear vendors, like Nokia, ZTE ans UTStarcom have given BSNL an ultimatum to pay off its debts to these companies until Dec 31 and have warned it that in case it fails to pay off its debts until the ultimatum, these companies shall stop supporting the telecom operator’s pan-India network.

These vendors have written separate letters to BSNL, complaining that the company hasn’t paid them since November 2018. They also said that this might adversely affect their relations and made very clear that a discussion on their plans for future roll-out and support plan could only be devised after the entire outstanding dues are released by December-end.

According to BSNL chairman Pravin Kumar Purwar, they are very sure of resolving these issues and has also assured that if these multinational vendors wait till December-end, they could all cross the bridge together. The vendors however, appear highly unhappy at the situation.

How Much Does BSNL Own to Each of these Vendors?

Nokia wrote a letter to BSNL on December 16, according to which the current outstanding amount, including capes and open is above Rs 1200 crore. It expects a firmer and committed response to its previous letter dated December 2 which it can take back to its management.

Nokia said that it was extremely disappointing that despite follow-ups for nearly 14 months and the recent announcement of revival package by the government, it still hasn’t received any update on a clear timeline for repayment from BSNL. These dues are creating pressure on Nokia’s ability to invest in BSNL to deliver and seek global approvals for any 4G expansions.

In the letter that ZTE wrote to BSNL, it mentioned that it too hasn’t received any payments since November 2018 and this was making it extremely difficult to support BSNL with enormous pending payment, which crossed over Rs 1,300 crore, including both opex and capex. The Chinese vendor has also asked a clear plan from BSNL to safeguard any future investment.

UTStarcom, on the other hand supports BSNL’s 3G transmission and NGN network. It termed the current situation as “extremely difficult”, in the absence of any clarity from the telco. It said that their invoices were pending for over 500 days and that outstanding dues would surpass Rs 500 crore by December end.

However it cannot stop supporting BSNL as the network is critical. It responded that it had to pay its partner vendors too. UTStarcom would be badly impacted if BSNL is unable to clear its debts until Dec end.