Bailout for BSNL

Mon Jan 09, 2012 |  By News Admin 

Once a crown jewel of Indian’s state-run enterprises, the BSNL is now a shadow of its former self. Earning hefty revenue of 40,000 crores a year until 2006, the company now has a meager 2,500 crore cash reserves that has sent alarm bells throughout its management. BSNL had been at the forefront at making telecom services available for Indian population for both rural and urban centers and continue to provide services for far-flung and remote areas that are commercial not viable for private companies. In the past few years the company faced severe competition and its revenues continued to fall. Fearing left out from the competition, BSNL auctioned for 3G license and that brought its cash reserves down to alarming levels. The losses are significant, company has yet to collect over 6,000 crore dues from customers and has agitated workforce that has already threatened to go on strike. BSNL has commenced emergency plans to rectify the situation. Planning to ask for a bailout package from the government initially, the company instead voluntarily surrendered Broadband Wireless Access spectrum in order to recover its guarantee money (6,000 crores) from the government. It has also planned to introduce Voluntary Retirement Scheme targeting 1 lakh employees that will save 2,400 crores annually. The planning for survival has been made by BSNL but it will be a difficult task to manage.