- BSNL has said high employee payouts, fierce competition and others as reasons for financial woes
- The FY19 losses for BSNL are expected to narrow down Rs 7,500 crore
Bharat Sanchar Nigam Limited (BSNL) has been facing a cash problem for the last three months or so, which has been the reason for the delay in the disbursement of salaries to its employees. However, in a new update, the cash-strapped telecom operator has said that its 1.65-lakh workforce will receive its wages for the June month in the coming days, as per an ET Telecom report. According to the telecom operator, the government owes BSNL about Rs 14,000 crore and it has sufficient cash flows to meet these ends. An official of BSNL revealed that the company has enough cash flow and that the Department of Telecommunications (DoT) owes the amount to the company.
BSNL’s Payment Receivables from the Government to Help Distressed Telco
As per the telco’s statement, the salaries of BSNL employees will be credited on July 1. It is worth noting that BSNL’s financial problems have become increasingly troublesome since February; since that is the month when the telco started missing salary payments and also missed payments to national or multi-national vendors. Some of these firms which were strung along by BSNL included Nokia, ZTE, ATC, Bharti Infratel, Sterlite Tech, Vihaan Networks Limited (VNL), UTStarcomm, Fiberhome Networks, and Clixxo Broadband.
The official speaking about the development remarked, “BSNL has been seeking a refund for the Broadband Wireless Access (BWA) spectrum return and the excess amount taken by the government towards pension contribution, in addition to nonpayment of various state-funded connectivity programs that together come at close to Rs 14,000 crore.”
BSNL Cites Lack of 4G Availability as Prime Reason for Cash Problem
It is worth noting that BSNL had sought a payment of Rs 6,724.51 crore for the return of BWA spectrum, this was in addition to BSNL’s demand of additional Rs 2,300 crore which was paid to the government in excess for pension liability 2007 onwards and a group of ministers, headed by Kapil Sibal had approved it. BSNL’s bills for multiple initiatives have also been met with resistance in getting clearance in rural and remote areas including Left Wing Extremism (LWE) – I programme.
In addition to all these bills and dues which BSNL has raised to the government, the centre is also yet to clear Rs 3,300 crore worth of loan receipt which it had announced ahead of Lok Sabha election in March 2019. The official added this is one of the reasons why BSNL is financially crippled. Another reason for BSNL’s heavy losses has been high employee expenses as well. Nearly 70% of BSNL’s revenue goes into maintaining employee salaries, whereas in the case of private telecom operators it is less than 5%. On Wednesday, telecom minister RS Prasad in a letter to the government stated the lack of 4G services, high employee payouts and fierce competition as reasons for BSNL’s poor financial health. In the FY 2019, BSNL is expecting its losses to come down to Rs 7,500 crore from the previous year Rs 7,992 crore loss, and this would be owing to the various cost-cutting measures and healthy growth in enterprise business.
Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.