Ringing in relief for MTNL, BSNL: DoT seeks government support for one-time fee payment

The telecom department wants the government to bail out public sector telecom majors BSNL and MTNL on payment of one-time fee. Sources told NDTV that the department of telecommunication (DoT) will apply to the cabinet for paying Rs 1,626 crore upfront and Rs 893 crore annually on behalf of these companies from the government's coffers. 

The Telecom department (DoT) now feels that these companies will be unable to further bear the burden of one-time fee to be paid by all telecom players holding more than 4.4 MHz of spectrum. The two companies will together have to pay Rs 10,117.57 crore as one-time fee.

However, both the telecom companies are going through a financial crisis. BSNL made a loss of Rs 8,851 crore in 2011-12, while MTNL's loss for the same period was Rs 4,110 crore.

Sources also told NDTV that BSNL and MTNL have offered to return some excess spectrum they hold in many of the telecom circles to cut the load of one-time spectrum fee. 

4G SPECTRUM

The cabinet will further consider whether the government will allow both BSNL and MTNL to return Broadband Wireless Spectrum (BWA) - popularly known as 4G spectrum - to the government and get a refund for it, sources told NDTV.

Both BSNL and MTNL were the first to get BWA spectrum, almost two years before others, but with the condition that once the spectrum auctions are completed they will have to match the highest bids in all the telecom circles where they have BWA spectrum. Consequently both the companies ended up paying over Rs 28,000 crore for the 4G spectrum. Now, both want to return the spectrum in many circles as it is not a viable business for them.

So, the government now has to decide whether it wants to refund Rs 6,725 crore to BSNL for returning 4G spectrum in 6 circles.  MTNL seeks a refund of Rs 4,534 crore for the spectrum it holds in Delhi and Mumbai circles.

The government has the option to re-auction this spectrum to raise money for refunding the telecom companies. 

The union cabinet is expected to take up these proposals in the next few weeks after other ministries send back their comments on the cabinet note circulated by the telecom department.