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Last Updated : Jun 24, 2019 03:27 PM IST | Source:

Govt seeks Rs 2,500cr term loan from banks to keep BSNL afloat: Report

The deal, if it goes through, would help the telco survive until the Centre finalises a revival plan

Moneycontrol News @moneycontrolcom

The government is negotiating with banks for a term loan worth Rs 2,500 crore, a move that would help the ailing state-owned telecom company Bharat Sanchar Nigam (BSNL) stay afloat, reports Business Standard. The paper has learnt that negotiations are on to secure favourable repayment terms.

The deal, if it goes through, would help the telco survive until the Centre finalises a revival plan. An official told the paper that the loan will be enough to keep the company afloat for six months. “The loan will help in meeting the company’s operating expenses, salaries, bill payments, vendor payments, etc,” a source told Business Standard.

However, experts told the paper that there is a need to reduce BSNL staff as Rs 2,500 crore is too little given the scale of the company. As reported by the paper, sale of the company's land assets is not very easy. It was allotted for telephone exchanges by the states, since land is a state subject.


To repay loans and to provide salaries, the Centre has agreed upon the release of Rs 850 crore by June-end. BSNL is reeling under losses, faced with delays in salary payment, huge number of employees and lack of 4G spectrum.

The Centre will, in the meantime, come up with a revival plan for the cash-strapped company. Earlier, the government had assured both BSNL and Mahanagar Telephone Nigam (MTNL) of a revival packages after the two public sector undertakings sought relief via financial stimulus.

In the revival package, the company might receive the 4G spectrum it sought, along with liberalised spectrum in the 2,100 MHz band, at market prices. A Voluntary Retirement Scheme (VRS) of Rs 6,365 crore and an equity infusion worth Rs 6,767 crore for allotment of the 4G spectrum would be part of the proposed package. The lease revenue earned via land asset monetisation will be used to repay the 10-year bonds, which are expected to fund the VRS.

While the telecom sector has a debt of Rs 6.1 lakh crore, BSNL’s debt stands at Rs 13,500 crore.
First Published on Jun 24, 2019 03:27 pm
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