BSNL, MTNL revival: Government faces costly options

A group of ministers led by home minister Amit Shah is understood to have met on Tuesday to explore ways to revive sick telecom PSUs —BSNL and MTNL —; a task which seems herculean with every passing day. Since the days of the government garnering high revenues through spectrum auctions are over, the choices before it are limited and also costly. Hyper competition and spectrum auction design led to generation of surplus for the exchequer in the past but any such chances are not there now. Thus, for the government also, the options boil down to do what owners of private telcos are doing: Either pump in large amount of equity to keep the company afloat or shut it down. Ironically, both the options would cost the government a fortune.

The third option of just providing cheap or free 4G spectrum to BSNL and MTNL, which they are demanding, will not put the two back on rails. For perspective, just look at the facts. Fiscal 2008 was the last year of positive operating profit (Ebit) for BSNL. Since then, the company has posted a cumulative (FY2009-18) Ebit loss of Rs 82,000 crore.