Troubles for BSNL and MTNL Increase as Trai Steps Back from 4G Spectrum Allocation

The Telecom Regulatory Authority of India (Trai) has shed off any responsibility related to allocation of the fourth generation, or 4G airwaves to the government led telecom operator Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), ET Telecom reported. The regulator has said to the department of telecommunications (DoT) that administrative allocation of spectrum to public companies is a “policy” decision.

Troubles Increase for BSNL and MTNL

A DoT official said in this regard, “Early this week, the Trai in a letter to the telecom department said that the allocation of the spectrum to public-owned entities is an administrative matter and the government would be in the best position to dispose of the matter.”

This new development in the spectrum allocation row has brought hurdles for the Narendra Modi led NDA government which was already ideating on the plan of seeking approval from the Election Commission of India (ECI) to take the radio waves allocation proposal to the Cabinet. There has also been a building pressure from the employees of the government led telcos as the 2 lakh people from the workforce are mounting pressure on the government on top of the recent financial woes.

Last month, the DoT had sought a recommendation from Trai on whether or not the spectrum could be allotted to two state-driven operators administratively. If the allocation of the spectrum happens, then the two government-led telecom operators will be able to step into the fourth-generation network thus levelling their operations with the likes of other telecom operators like Reliance Jio, Vodafone Idea

Following the 2012 Supreme Court verdict, quashing 122 licenses, Justice GS Singhvi said that while it is about the allocation of natural resources for something like spectrum, the state is bound to go by the auction method and it also has to be ensured that the auction method followed by the state is non-discriminatory in manner.

Widening Losses for BSNL and MTNL and Revival at Risk

With this, the situation for these two state-led telcos is getting grimmer as the time passes. In a time, where the industry is getting itself ready to welcome the fifth-generation, 5G technology, the two telcos are still struggling to get their network upgraded to 4G. This is not only burning a deep hole in the balance sheet of these telcos with mounting losses but is also contributing to subscriber churn as more and more customers opt for better services. The situation also threatens the revival of these companies.

BSNL and MTNL are already urging the government to move forward with the revival plan which involves asset monetisation, virtual retirement scheme (VRS) and allocation of 4G spectrum. The BSNL workforce has also blamed the incumbent government for blatantly favouring the Mukesh Ambani led, Reliance Jio.