The government has to support the PSU telcos to enable them to withstand competition.
New Delhi: The finance ministry is examining the Department of Telecom's proposal on allotting spectrum worth Rs 13,000 crore for 4G services to BSNL and MTNL as the planned allocation will be an expenditure on the government.
Sources in the ministry said the Department of Expenditure is looking at the pros and cons of the proposal. The DoT has also submitted the law ministry's approval for the allocation in view of the Supreme Court order that bars any method of natural resources allocation other than auction.
Public sector BSNL and MTNL have sought 4G spectrum through fresh equity infusion, effectively ruling out any capital expenditure to be incurred as both are declared 'incipient sick' by the Department ofPublic Enterprise. Since these are costs and expenditures , they will be examined accordingly.
The government has to support the PSU telcos to enable them to withstand competition. Their survival without 4G spectrum, however, is tough. The government is working on a strategy to settle issues that emerged post apex court court, telecom minister Manoj Sinha had said in support of these proposals.
The DoT, meanwhile, has turned down a BSNL request seeking letter of comfort for taking loans from banks to meet the operational expenses, department sources said, adding the PSU should be able raise it on its own financial strength. BSNL management did not comment on the queries on this issue.
The finance ministry is discussing 4G spectrum allocation issue as part of the inter-ministerial consultations. Thereafter, the DoT will approach the Cabinet with a revised draft note on the government infusing funds into the PSUs. It is likely that year-end the proposal will be with the cabinet, sources said.
MTNL, the government operator in Delhi and Mumbai, plans to roll out 4G services with the help of Rs 6,292 crore capital issuance from the government. MTNL has planned that it would relay its 4G services in the 1800 Mhz and 2100 Mhz spectrum bands.
MTNL chairman P K Purwar said the PSU has submitted a plan for preferential equity, and without diluting the company’s ownership equivalent amount which is coming at Rs 6,292 crore for 4G launch.
BSNL has sought Rs 6,652 crore as equity infusion from the government to fund its spectrum purchase worth about Rs 13,885 crore, according to information shared by the telecom minister in Parliament. BSNL chairman and MD Anupam Shrivastava had earlier told that the corporation is seeking spectrum in the 2100 MHz band for all circles, except Rajasthan, where the company is looking for spectrum in the 800 MHz band.