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BSNL may get licence-fee relief to regain lost ground
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State-owned telecom major BSNL may be exempted from sharing 6-10% of its annual revenues as licence fee levy with the government leading to annual savings of over Rs 4,000 crore, after the PSU presented its case before the prime minister’s office (PMO) on Wednesday. The PMO is looking into this proposal in a bid to help the telco revive its fortunes, make up lost ground to private operators and remain competitive in the world’s fastest-growing telecom market.

The PMO also conceded a suggestion for immediate sale of 10% government equity in the telecom giant. The meeting reviewed challenges before the telecom PSUs BSNL and MTNL, including issues of expansion. The PMO has called for a meeting with the communications ministry to discuss the plight of BSNL, especially with regard to its declining revenues and market share.

“We discussed with the PMO about the licence fee waiver for BSNL. As the first step, we sought the waiver for fixedline services in rural India. We had already approved this policy change, but it could not be implemented (from January 1, 2009 due to objections from the finance ministry). Rural licence fee waiver alone will enable BSNL to save about Rs 1,800 crore annually,” communications minister A Raja told ET after the late evening meet with the PMO. BSNL’s CMD Kuldeep Goyal and officials from the department of telecom (DoT) were also present at the meeting.

In its presentation to the PMO, Mr Raja and his ministry pointed out that as per the National Telecom Policy of 1999 (NTP ‘99), state-owned telcos are exempted from paying licence fee. It was also highlighted that despite this Clause in NTP 99, BSNL had been paying between 6% and 10% of its annual revenues (depending on the area of operation) to the Centre as licence fee. Besides, it was also pointed out that BSNL requires about Rs 8,774 crore in capital expenditure to support its unviable wireline operations, especially in rural India.

One of the several factors that led to the PMO calling for a meet to review BSNL’s performance could have been a demand by independent MP and member of the standing committee on finance, Rajeev Chandrasekhar, who had sought the urgent intervention of the prime minister into the deteriorating financial situation at the PSU. Besides, BSNL’s move to put its 93 million lines GSM contract ‘on hold’, had also triggered concerns.

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