Kotak Institutional Equities (KIE) has said that state-run telecom firm BSNL’s accumulated losses may have crossed Rs 90,000 cr by December end, and asked the government to take a call on either to consider equity infusion to keep the telco afloat or shut it down and bear a one-time loss to save costs.
“Troubles rising at BSNL (Bharat Sanchar Nigam Ltd). BSNL missed paying its February 2019 employee salaries on time and has not paid the same yet. “The government will bear an increasingly larger share of the burden of sector stress, if pricing does not move up soon,” said the KIE report. “We wouldn’t bet on larger implications in the form of the government taking a fresh look at sector health.”
It further said the preferential low or no-cost spectrum allocation alone will not solve the problem. The BSNL management had sought preferential equity infusion in the company in lieu of providing 4G spectrum. Similar to what the owners of other telcos are doing, the government will need to answer consistent, large, equity calls to keep BSNL afloat. “FY2008 was the last year of positive operating profit (EBIT) for BSNL. Since then, the company has posted a cumulative, FY 2009-18, EBIT loss of Rs 82,000 cr.
“This figure would have crossed Rs 90,000 cr by December 2018 end, in our view. Employee expenses, including retire benefit accruals, stood at 66 per cent of operating revenues in FY2018 versus 21 per cent in FY2006 and 27 per cent in FY2008. “FY2018 operating revenues, at Rs 22,700 cr, stood 37 per cent below the peak FY2006 levels reflecting industry-wide challenges as well as loss of market share for BSNL.
On the balance sheet front, BSNL moved from a peak net cash position of Rs 37,200 cr at end-fiscal 2008 to a net debt position of Rs 8,600 cr at end-2018. “We believe the current annual cash loss run-rate for BSNL would be in excess of $1 billion (Rs 7,100 cr). These challenges have also meant that BSNL remains far behind the three private operators (Bharti, VIL and R-Jio) on network coverage, capacity and quality,” the broking firm said. “R-Jio’s imminent FTTH foray will likely impact BSNL’s wireline business soon; this business has been the only growing segment for BSNL the past few years,” it added.
Amidst the acute financial crisis at BSNL, the Dept of Telecom has handed over the responsibility of the Finance Director at the cash-strapped PSU to current Director Mobile as well as fixed line, Vivek Banzal divesting the charge from Sujata Ray. Sources said Banzal, who is already holding two key charges, has been given the charge of Finance Director and this was effected by the DoT on Feb 28. Banzal would now be looking at all the three key wings, fixed line, mobile and finance at BSNL.
Cleared Feb salaries of employees: CMD
BSNL said the pending February salaries of its 1.76L employees have been cleared. It also announced the launch of various schemes to increase its market share and revenue. “We have disbursed salary of all employees that was pending for the month of February. Employees ensured customer services run uninterrupted despite issues they were facing. Now we will aggressively focus on increasing our market share and revenue with attractive schemes,” BSNL CMD, Anupam Shrivastava, said.