State-run
Bharat Sanchar Nigam (BSNL) has decided to borrow Rs 4,300 crore in the
current financial year to fund capital expenditure plans. But the loans
will not burden its present debt level, which is at Rs 9,000 crore (as
on March 2018) on a top line of Rs 30,000 crore, said a top official of
the public sector undertaking.
“We are the less leveraged telco in the present competitive scenario. For the current financial year, the Rs 4,300 crore borrowing is for meeting capex requirements. This is a reflection of our healthy financial position, despite the fact that we don’t have Mumbai and Delhi circles for operations, no adequate spectrum to launch 4G services and our huge Rs 16,000 crore a year wage bill is met with internal revenue generation,” Anupam Shrivastava, chairman and managing director of BSNL, told Financial Chronicle.
The huge wage bill for nearly 200,000 employees is a burden as the top line gets affected. If this (wage bill) is reduced by up to Rs 3,000 crore, the PSU would become a dividend paying company, Shrivastava said.
BSNL’s demand for 5Mhz of 2100Mhz band of spectrum to start 4G service is pending with the telecommunications department for the last six months, while competitors have rolled it out in almost all circles, affecting the PSU’s service edge.
“The Rs 4,300 crore will go towards network expansion. Any rise in capex, due to some unforeseen developments, will be met through internal revenue generation from services,” he said.
Explaining the borrowing plan, the BSNL CMD said, “We have decided to resort to borrowings as all revenue sources have been exhausted,” and added “This way through tight monitoring, we have been able to keep debt at Rs 9,000 crore. Our opex of Rs 26,000 crore is funded through internal accruals.”
The telecom industry is groaning under Rs 4.75 lakh crore debt. Around 80 per cent (Rs 3.4 lakh crore) of this debt is due to spectrum payments incurred by telcos during auctions.
Airtel has a consolidated net debt of Rs 92,000 crore and Vodafone-Idea merged entity Rs 1.15 lakh crore (as on end March). To pare the high debt, Vodafone and Idea have steadily been raising money in the past few months through equity infusions, stake sales and sale of captive towers among other avenues.
MTNL, another telecom PSU, has a debt of Rs 20,000 crore on a top line of less than Rs 3,000 crore.
To meet the debt obligation of Rs 45,000 crore, Reliance Communication exit the wireless business and sold assets to Jio.
According market and industry sources, Reliance Jio Infocomm will also raise as much as $2.2 billion in foreign currency debt to fund the purchase of RCom’s wireless assets. The deal would be funded through a mix of debt and internal accruals, they said.
Despite competing with private telcos, BSNL being a PSU operates under a different set of rules where it has also to meet the government’s digital and universal connectivity agenda.
Though refunded for the social obligations through USO Fund and other channels, the PSU incurs immediate expenditure for these projects. Many times, differences between BSNL and implementing agencies over the invoice amounts drag for years halting cash flow and leaving gaps in its balance sheets.
Shrivastava said over the last 22 months BSNL’s debt has been at the same level despite the cutthroat competition. The slow operational decision making processes too put pressure on the cash flow.
The PSU, he said has a healthy debt-equity ratio of 0.18 against the industry average of 0.79. The debt-equity ratio indicates the debt pressure on companies. BSNL is yet to announce its financial results for 2017-18. For 2016-17, its net loss stood at Rs 4,793 crore against Rs 4,859 crore in 2015-16.
Tyhe company revamped its retail subscriber retention strategy to attract more customers to its network where it plans to offer a speed of 25-100 mbps through broadband, FTTH and wireless to high-end customers and give 5GB of data to customers per day, the highest among all telcos, at a nominal cost. “The company aims to attract more customers, revenue can come alongside,” Shrivastava said.
“We are the less leveraged telco in the present competitive scenario. For the current financial year, the Rs 4,300 crore borrowing is for meeting capex requirements. This is a reflection of our healthy financial position, despite the fact that we don’t have Mumbai and Delhi circles for operations, no adequate spectrum to launch 4G services and our huge Rs 16,000 crore a year wage bill is met with internal revenue generation,” Anupam Shrivastava, chairman and managing director of BSNL, told Financial Chronicle.
The huge wage bill for nearly 200,000 employees is a burden as the top line gets affected. If this (wage bill) is reduced by up to Rs 3,000 crore, the PSU would become a dividend paying company, Shrivastava said.
BSNL’s demand for 5Mhz of 2100Mhz band of spectrum to start 4G service is pending with the telecommunications department for the last six months, while competitors have rolled it out in almost all circles, affecting the PSU’s service edge.
“The Rs 4,300 crore will go towards network expansion. Any rise in capex, due to some unforeseen developments, will be met through internal revenue generation from services,” he said.
Explaining the borrowing plan, the BSNL CMD said, “We have decided to resort to borrowings as all revenue sources have been exhausted,” and added “This way through tight monitoring, we have been able to keep debt at Rs 9,000 crore. Our opex of Rs 26,000 crore is funded through internal accruals.”
The telecom industry is groaning under Rs 4.75 lakh crore debt. Around 80 per cent (Rs 3.4 lakh crore) of this debt is due to spectrum payments incurred by telcos during auctions.
Airtel has a consolidated net debt of Rs 92,000 crore and Vodafone-Idea merged entity Rs 1.15 lakh crore (as on end March). To pare the high debt, Vodafone and Idea have steadily been raising money in the past few months through equity infusions, stake sales and sale of captive towers among other avenues.
MTNL, another telecom PSU, has a debt of Rs 20,000 crore on a top line of less than Rs 3,000 crore.
To meet the debt obligation of Rs 45,000 crore, Reliance Communication exit the wireless business and sold assets to Jio.
According market and industry sources, Reliance Jio Infocomm will also raise as much as $2.2 billion in foreign currency debt to fund the purchase of RCom’s wireless assets. The deal would be funded through a mix of debt and internal accruals, they said.
Despite competing with private telcos, BSNL being a PSU operates under a different set of rules where it has also to meet the government’s digital and universal connectivity agenda.
Though refunded for the social obligations through USO Fund and other channels, the PSU incurs immediate expenditure for these projects. Many times, differences between BSNL and implementing agencies over the invoice amounts drag for years halting cash flow and leaving gaps in its balance sheets.
Shrivastava said over the last 22 months BSNL’s debt has been at the same level despite the cutthroat competition. The slow operational decision making processes too put pressure on the cash flow.
The PSU, he said has a healthy debt-equity ratio of 0.18 against the industry average of 0.79. The debt-equity ratio indicates the debt pressure on companies. BSNL is yet to announce its financial results for 2017-18. For 2016-17, its net loss stood at Rs 4,793 crore against Rs 4,859 crore in 2015-16.
Tyhe company revamped its retail subscriber retention strategy to attract more customers to its network where it plans to offer a speed of 25-100 mbps through broadband, FTTH and wireless to high-end customers and give 5GB of data to customers per day, the highest among all telcos, at a nominal cost. “The company aims to attract more customers, revenue can come alongside,” Shrivastava said.
