In a surprise move, state-run telecom operator Bharat Sanchar Nagar Nigam Limited has announced it will not be participating in the forthcoming 2G spectrum bidding slated to begin March 11 this year. The state-run telco hasn't revealed the reasons for its decision.
"BSNL will not participate in the auction," BSNL Chairman and Managing Director R K Upadhyay is quoted as saying. The government is hoping to raise about Rs. 45,000 crore from the next round of spectrum bidding. BSNL's departure from the bidding is quite surprising as new entrants as well as existing telecom operators are likely to participate in the auction.
The first round of spectrum saw poor participation mainly due to steep reserve price. An Empowered Group of Ministers (EGoM) recently proposed a 30-50 percent cut in the base price. Cabinet will be taking the final call on the proposal.
In a related development, BSNL and MTNL have agreed to surrender part of their 2G spectrum to compensate the burden of one-time spectrum fee imposed them.
"BSNL has proposed to surrender part of GSM spectrum in certain cities of few circles and 1.25 Mhz of CDMA spectrum in Kerala circle," a government source is quoted as saying.
Both the state-run telcos will have to jointly shell out Rs. 10,117.57 crore if they look to retain telecom airwaves. BSNL will have to shell out Rs. 6,911.86 crore which includes Rs. 5,886.81 crore for 2G spectrum from January 1, 2013 and Rs. 1,025.05 crore in dues for holding spectrum between July 1, 2008 to December 31, 2012.
MTNL will have to pay Rs. 3,205.71 crore, inclusive of prospective charge of Rs. 2,603.08 crore and retrospective charge of Rs. 602.63 crore, as per present spectrum holding.
The Department of Telecom (DoT), in the meanwhile, has said the Centre should bear the cost of the one-time spectrum fee levied on BSNL and MTNL. The telecom department is of the view the telcos are burdened with hefty debts and are in no position to pay about Rs. 12,000 crore for the licence.
The DoT in its Cabinet note said these telcos were strategically important to the country as they are providing services in far-flung areas and jointly constitute 80 percent of landline and 71 percent of broadband connections.
"BSNL is currently implementing a number of pan-India projects of national importance - network for spectrum costing around Rs. 14,500 crore, national optical fibre network (NOFN) costing around Rs 20,000 crore, and in the North Eastern regions, it is providing telecom services in those areas where no operator has reached. BSNL and MTNL together are having strategic importance for providing telecom services to defence services and other central paramilitary forces. BSNL is also instrumental for implementing most of the schemes of Universal Service Obligation Fund for providing telecom services in rural and remote areas," the Cabinet note said.