NEW DELHI – Hong-Kong based-UTStarcom, a major
telecom equipment provider to Bharat Sanchar Nigam Ltd, is expected to
benefit from the Centre's recent decision to revive the public sector
telecom company. The government's decision to inject fresh capital into
the state-owned company should facilitate the payment of a 5-bln-rupee
due owed to UTStarcom.
BSNL is the company's major strategic customer in India. UTStarcom provides planning, engineering, installation, integration, testing, and commissioning of the state-owned company's network.
On Oct 23, the Cabinet had approved a revival package for BSNL and Mahanagar Telephone Nigam Ltd that includes merging the two loss-making companies, monetising their assets, allocation of fourth-generation spectrum, and voluntary retirement schemes for employees with an aim to turn the combined entity profitable in two years.
The revival plan includes infusion of 150 bln rupees through issuance of sovereign-guaranteed bonds, among others. BSNL has a debt of about 200 bln rupees.
BSNL has incurred losses since 2009-10 (Apr-Mar) on account of its huge employee cost and dwindling market share due to private competition. As a result, it has on occasion failed to make timely payments to vendors. For UTStarcom, this had led to cash flow issues and delays in expanding its India business plans.
"….it is close to 500 crores (5 bln rupees)," a senior official from the Hong Kong-based company told Cogencis on the outstanding dues from BSNL.
UTStarcom is mulling setting up a manufacturing, and research and development centre in India. The company currently assembles its telecom equipment at facilities in Chennai and Bengaluru.
"Most of the focus is on collection and the other things and operators are also not ready to invest further. So the business is…relatively slow this year," another company official said. The company's management is expected to review their India plans in December.
India operations contribute close to about 50% of UTStarcom's total revenues. It recorded a net profit of 175 mln rupees in 2018-19 (Jan-Dec), down 36.6% on year, from its India operations.
The cash flow issues in India have also impacted the company's latest earnings result.
In Apr-Jun, the company's net equipment sales fell 67% to $8.0 mln on year. The decrease was due to India's uneven project revenue pattern, the company stated in its earnings release. End
US$1 = 70.95 rupees
Edited by Subham Mitra
Cogencis Tel +91 (11) 4220-1000
Send comments to feedback@cogencis.com
BSNL is the company's major strategic customer in India. UTStarcom provides planning, engineering, installation, integration, testing, and commissioning of the state-owned company's network.
On Oct 23, the Cabinet had approved a revival package for BSNL and Mahanagar Telephone Nigam Ltd that includes merging the two loss-making companies, monetising their assets, allocation of fourth-generation spectrum, and voluntary retirement schemes for employees with an aim to turn the combined entity profitable in two years.
The revival plan includes infusion of 150 bln rupees through issuance of sovereign-guaranteed bonds, among others. BSNL has a debt of about 200 bln rupees.
BSNL has incurred losses since 2009-10 (Apr-Mar) on account of its huge employee cost and dwindling market share due to private competition. As a result, it has on occasion failed to make timely payments to vendors. For UTStarcom, this had led to cash flow issues and delays in expanding its India business plans.
"….it is close to 500 crores (5 bln rupees)," a senior official from the Hong Kong-based company told Cogencis on the outstanding dues from BSNL.
UTStarcom is mulling setting up a manufacturing, and research and development centre in India. The company currently assembles its telecom equipment at facilities in Chennai and Bengaluru.
"Most of the focus is on collection and the other things and operators are also not ready to invest further. So the business is…relatively slow this year," another company official said. The company's management is expected to review their India plans in December.
India operations contribute close to about 50% of UTStarcom's total revenues. It recorded a net profit of 175 mln rupees in 2018-19 (Jan-Dec), down 36.6% on year, from its India operations.
The cash flow issues in India have also impacted the company's latest earnings result.
In Apr-Jun, the company's net equipment sales fell 67% to $8.0 mln on year. The decrease was due to India's uneven project revenue pattern, the company stated in its earnings release. End
US$1 = 70.95 rupees
Edited by Subham Mitra
Cogencis Tel +91 (11) 4220-1000
Send comments to feedback@cogencis.com
