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As Per Latest Information BSNL and MTNL turn EBITDA positive after revival plan, reducing losses by 50%.

BSNL & MTNL turns EBITDA positive in first half of FY 2020-21

A press release on the financial performance of MTNL and BSNL in the first half of FY 2020–21 was issued by the Press Information Bureau of the Government of India. According to the most recent press release, BSNL and MTNL achieve positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) within a year after the Union Cabinet’s acceptance of the revival plan. In comparison to 2019–20, both groups anticipate to cut their losses by 50%.

Under Telecom Minister Ravi Shankar Prasad, BSNL currently reports positive EBITDA after reporting negative EBITDA in 2015–16. EBITDA increased to Rs 3,855 crore in 2015-16 from Rs 672 crore in 2014-15 thanks to BSNL’s growth in income and ability to reduce spending on wages, administration, employee pay, and other perks five years ago. At the time, Ravi Shankar Prasad was the Union Minister. After a few difficult years and the implementation of a rehabilitation plan, BSNL is once more headed in the direction of profitability.

In order to fulfill its promise to resuscitate BSNL for public service and justice, the Indian government offered the PSU a support package and asked for extensive discussion and debate in both chambers of Parliament. During the Lower House’s Question Hour in November 2019, Telecom Minister Ravi Shankar Prasad declared, “We are going to revive BSNL and make it profitable.”

The state-owned companies Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) have become EBITDA positive in the first six months of this fiscal year, a year after implementing a recovery plan. While EBITDA for BSNL increased from negative Rs. 3596 crores for the half year that ended in September 2019 to positive Rs. 602 crores, the similar statistics for MTNL were negative Rs. 549 crores in September 2019 and positive Rs. 276 crores at now. In comparison to 2019–20, both organizations are anticipated to cut their losses by 50%, according to Department of Telecommunications (DoT) sources.

The Voluntary Retirement Scheme (VRS), which resulted in a decrease of approximately 50% of the workforce at BSNL and 75% at MTNL, contributed to the improved performance. Additionally significant was BSNL’s ability to keep income steady and reduce other expenses. The success of BSNL’s Fiber-To-The-Home (FTTH) connections is being closely watched by DoT, which is likewise extending them quickly. According to data released by TRAI, market share in the mobile category climbed to 10.36% in October 2020. In the mobile market, BSNL added nearly 10 million new users during this fiscal year. The government’s push for cashless transactions through Digital India has also benefited from this, as the number of online transactions surged by over 43% in December 2020 compared to the previous fiscal year.

BSNL Revival Package by the Union Cabinet

It will be recalled that in October 2019, the Union Cabinet approved the revival package for BSNL/MTNL, which included, among other things, VRS, support for 4G spectrum, monetization of core and non-core assets, Sovereign Guarantee for Bonds to be Raised by the PSUs, and the short-term merger of MTNL and BSNL.

Bond sales have been a very effective source of funding for BSNL and MTNL. In MTNL’s most recent bond offering, the issuance was oversubscribed by three times, while BSNL received overtwo subscriptions. MTNL and BSNL were able to monetize core and non-core assets worth a combined Rs. 1830 crores in 2019–20, according to DoT sources. It is anticipated that this amount would exceed Rs. 3000 crores this year. Six properties are anticipated to be accepted for auction using the DIPAM procedure in this regard.

By leasing out its towers, BSNL is making money off of its tower assets. It made Rs. 1018 Cr. the year before, and it has plans to securitize the rent revenue from towers. Because BSNL towers have a unique proposition of fiber connections in more than 70% of them, TSPs find them to be quite appealing. Fiber has been made money by being leased to independent TSPs and BBNL. At a cost of Rs. 18000 per kilometer per year, it has leased out 2 lac kilometers of OFC, generating a profit of Rs. 360 Cr.

In terms of 4G services, the DoT’s position is very clear that the core network would be entirely developed in India. DoT sources claim that BSNL and MTNL are key assets that will provide Indian telecom manufacturers a significant boost.

Recall that there are now only 4 participants on the Indian mobile communication market, 3 of which are from the private sector, and the fourth is the BSNL/MTNL combination. With a sizable network all throughout the nation, BSNL/MTNL still has around 50% of the market share in the wireline or land line segment. By providing the services via fiber and tying this to FTTH connections, the PSUs intend to capitalize on this strength.

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Written by Shallu Srivastav

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