State-Run Telecom And Broadband Firms' Merger On Cards This Month

The government is planning to merge Bharat Broadband Nigam Limited (BBNL) with the loss-making state-run telecom operator Bharat Sanchar Nigam Limited (BSNL) this month, a senior official said.

BSNL chairman and managing director PK Purwar at a recent event organised by the All India Graduate Engineers and Telecom officers Association (AIGETOA), said that the government is giving the telecom firm an opportunity for a turnaround.

"The government has decided that BBNL is going to be merged into BSNL. This means all work of BBNL at the pan-India level will come to BSNL," Mr Purwar said at the All India Conference of AIGETOA on March 13.

In his meeting with the union telecom minister, Mr Purwar said he had an hour-long meeting to this effect.

BSNL already has a network of over 6.8 lakh kilometres of optical fibre cable (OFC) network.

With the proposed merger, BSNL will get 5.67 lakh kilometres of optical fibre, which has been laid across 1.85 lakh village panchayats in the country using the Universal Service Obligation Fund (USOF).

Special purpose vehicle (SPV) BBNL was formed in February 2012 to lay an optical fibre network across 2.5 lakh village panchayats across the country using USOF and provide access to all telecom operators on a non-discriminatory basis.

Telecom operators must pay an 8 per cent licence fee on their revenue from the sale of telecom services which includes a 5 per cent levy for USOF.

The state governments do not levy the right of way (RoW) charge on laying OFC by the BBNL, which helps it save a significant amount compared to the fees that telecom operators are required to pay.

A query sent to the Department of Telecom and BBNL elicited no reply.

However, few BBNL officials said that employees in the department are not in favour of the proposed merger due to the non-performance of BSNL on the Bharatnet project in the past and pending dues of vendors despite payment already made to the state-run telecom firm by the SPV.

The officials shared a standard view that private telecom operators also contribute to USOF.

Transferring BBNL assets under one player will be against the idea and objective of creating the SPV, which was to provide access to rural broadband networks on a non-discriminatory basis to all players.

When contacted, Mr Purwar said, "no such views are in notice of BSNL. The delivery of BBNL to meet the objectives of Bharat Net is much below the desired level. BSNL, as a custodian of USOF assets, will ensure that all such assets are made available to all TSP/ISP and other agencies on arm length principles."

In his speech at the conference, BSNL CMD asked employees to tighten their belt and put their best foot forward for the growth of BSNL, as the political leadership has given a free hand for the turnaround, and there is going to be no CAPEX crunch for the next two years at least.

Mr Purwar said, "in the budget, provision of around Rs 45,000 crore has been made for BSNL. It was earlier Rs 24,000 crore. Earlier provision was only for spectrum. Now, it is a spectrum, CAPEX and others. So the government wants to give you a free hand. Can you perform?"

He said that the company is in the last stage of testing for 4G and may approach the board to place a small order in March so that supply can start in May and June, and ground-level network testing and experience can be done.

"Then it should be taken further after a commercial discussion. The government's expectation is very clear from us. The Prime Minister wants it to be (done) by August 15," Mr Purwar said.

He said that the next phase of telecom growth would come from fibre-to-the-home service, and in the coming days, 1 lakh mobile base stations will serve as a point of presence for the distribution of fibre-based broadband connections to the subscribers.

"If we lose this opportunity, then there is no way that we will have an alternate option. The government is going against its stated policy for BSNL. If you see what is the policy for CPSE.

"The government's policy is to either perform or perish. The government wants to give BSNL a chance so that BSNL becomes a strategic asset. We have a responsibility to prove ourselves," Mr Purwar added.