New Delhi: Kotak Institutional Equities (KIE) has said that State-run telecom firm BSNL’s accumulated losses may have crossed Rs 90,000 crore by December end, and asked the government to take a call on either to consider equity infusion to keep the telco afloat or shut it down and bear a one-time loss to save costs.
The report also highlighted a grim picture of the entire industry due to low tariffs and forecast a not so healthy proceeds from the upcoming spectrum auction if it happens.
The sector may bleed further if pricing does not move up, it warned.
“We believe the days of supernormal exchequer surplus from the sector may be over. Hyper competition and smart spectrum auction design led to generation of material surplus for the exchequer in the past decade.
“We see low probability of ‘blockbuster’ spectrum auctions in the next few years,” the report said.
“Troubles rising at BSNL (Bharat Sanchar Nigam Ltd). BSNL missed paying its February 2019 employee salaries on time and has not paid the same yet.
“The government will bear an increasingly larger share of the burden of sector stress, if pricing does not move up soon,” said the KIE report.
“We wouldn’t bet on larger implications in the form of the government taking a fresh look at ‘sector health’.”
It further said the preferential low or no-cost spectrum allocation alone will not solve the problem. The BSNL management had sought preferential equity infusion in the company in lieu of providing 4G spectrum. Similar to what the owners of other telcos are doing, the government will need to answer consistent, large, equity calls to keep BSNL afloat.
“FY2008 was the last year of positive operating profit (EBIT) for BSNL. Since then, the company has posted a cumulative, FY 2009-18, EBIT loss of Rs 82,000 crore. (IANS)
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