Govt Starts Selling Critical Assets Of BSNL, MTNL To Raise Money; Merger Already Cancelled
Multiple assets belonging to Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) have been picked out for sale in FY22.
Given the companies’ financial troubles, asset monetisation has been chosen as a route for their revival.
What Is The Revival Package?
Among other things the measures include voluntary retirement scheme (VRS), allocation of resources to buy 4G spectrum and a merger which was canceled after its announcement in Oct 2019.
4G spectrum support, core and non-core asset monetisation and sovereign guarantee for bonds to be raised by the public sector undertakings (PSUs) are also included.
4G roll out is a key component of the package as it will likely contribute to high revenues in the wireless segment.
Given the size and scale of these assets, the bidding process can be expected to take a while.
Proceeds from the monetisation of these assets will then be used by the Centre to give a boost to their heavy loss enduring firms.
Rs 38,000 crore worth of asset monetisation has been earmarked by the govt over the next 4 years which will be used for debt retirement, bond servicing, upgrading and expansion of network, and finally, serving operational fund requirements.
When is 4G Coming to BSNL?
As informed to the parliament, 4G roll out can be expected in the next 18-24 months.
Furthermore Minister of State for Communications, Sanjay Dhotre, stated that the govt had no plans of privatising BSNL.
In a similar vein the govt is firm in that it will not scrap the 2G mobile communications system now that the 5G launch is just around the corner.
It is ultimately up to the operators to decide what technology for telecom services it chooses to deploy.
Expected Timeframe of Profitability
As per a parliamentary panel report BSNL will likely turn in profits in the FY 2023-24.
This however depends on implementation of plans and strategies under revival packages.
Another aspect to consider is whether revenue and cash flow and land asset monetisation sees reality.