Is it end of the road for BSNL? DoT asks telco to stop tenders

Chennai: Once market leader, State-owned Bharat Sanchar Nigam Limited (BSNL) has fallen into deeper trenches in recent times. The firm that has been struggling to pay its employees their salaries, has now been asked to put all its tenders on hold.

According to reports, the Telecom Department has asked BSNL to put all purchase orders on hold, including tenders, as the company is facing financial crisis.

The finance department of BSNL issued order in this regard earlier this month, directing all its circle head to take prior approval of Corporate Officer located in Delhi, before floating any new tenders for capital expenditure.

“The order issued to circle heads on 12 June says that BSNL is passing through a temporary financial stress and is not in a position to clear the accumulated liabilities,” a BSNL official on the condition of anonymity told PTI.

He said the BSNL’s finance department received the direction from finance wing of the DoT to put on hold all capital expenditure. The order has asked BSNL officers to put in abeyance advance purchase orders, and purchase orders of tenders that have been already finalised till further instruction.

Like other telecom companies, BSNL too has been facing stress in revenues after new entrant Reliance Jio entered the market.

With the entity unable to pay salaries, the government requested a loan of Rs 850 crore for the month of June to settle things temporarily.

To keep the company floating for the next few months, a loan of Rs 2,500 crore was also requested, however, the loan has not been sanctioned yet for banks take into consideration the pre-existing debt of Rs 13,500 crore that the firm has reeling over its head.

According to sources, if granted, the said financial aid would only be sufficient to keep the company afloat for the next six months. The situation has become more complex as the DoT asked BSNL not to go to banks for obtaining more loans, fearing lapses.

According to media reports, BSNL has been in trouble since the last 10 years due to poor government policies and delays in bringing new infrastructure. It is still awaiting government decision on allotment of 4G spectrum to compete in the market and has also sought government approval to monetise its real estate.

Director-Finance, BSNL, S K Gupta last month shot off a letter to all chief general managers of telecom circles, flagging the ‘fiercest ever competition’ being faced by the telecom sector and said ‘predatory tariff offerings by the competitors’ has triggered a sharp decline in revenue from services.

The company is estimated to have largest optical fibre cable network of 7.5 route kilometre. It posted an operating profit of Rs 672 crore in 2014-15, Rs 3,885 crore in 2015-16 and Rs 1,684 crore in 2016-17.

NT Bureau