BSNL crisis deepens, PSU telco starts losing BharatNet contracts

Loss-making Bharat Sanchar Nigam Ltd (BSNL), which is looking at a `74,000-crore government bailout, is in fact losing its existing contracts and that too from PSU firms.

The company has lost an annual contract worth around `400 crore for maintaining the fibre laid under the government’s ambitious BharatNet project to provide broadband connectivity to over 2.5 lakh gram panchayats, as its performance was not found to be up to mark.

Bharat Broadband Network Ltd (BBNL), a government PSU formed to lay the fibre has now awarded the contract to CSC e-governance Services, a special purpose vehicle set up by the ministry of electronics and IT (MeitY), at a lower annual charge, sources said.

“BSNL was maintaining the fibre from October 2017 to June 2019 but now a new contract for one year has been signed with CSC SPV. BSNL was paid over `800 crore for the purpose but the company failed to provide quality services,” said a source privy to the development.

The source further added that BSNL was paid `15,000 per year, per kilometer for fibre maintenance while the CSCs will charge `9,600 per year, per kilometer.

A query in this regard sent to BSNL remained unanswered till the time of going to the press. Dinesh Kumar Tyagi, CEO, CSC SPV, confirmed that a contract for one year for maintaining BBNL fibre has been signed in July 2019. He added village level entrepreneurs (VLEs) who run CSCs will be doing the job. Apart from losing the annual maintenance project, BSNL’s participation in the phase II of BharatNet project has also been curtailed by over 50%.

One of the reasons for the same is change in strategy of implementation as now state agencies will also be involved which was not the case in phase-I. The phase-I of the project, which connected 1 lakh gram panchayats, was implemented by three central public sector units – BSNL, RailTel and PGCIL, of which majority of work was done by BSNL.

In phase-II, apart from the participation of states and their agencies, the government is also exploring the option of public private partnership (PPP). As a result, many of the detailed project reports (DPRs) submitted by BSNL were either cancelled or put on hold, sources said.

As reported by Fe earlier, the government is in the process of finalising a `74,000-crore revival package for BSNL on the ground that closing it down would cost even higher – around `95,000 crore. The assumption behind the revival package, which involves an attractive VRS package to its 1.65 lakh employees, reducing the retirement age from the current 60 years to 58 years, will reduce the wage bill of the company which in FY19 was 77% of its revenues.

Further, if the company is provided 4G spectrum by the government as part of the package then it would be able to compete in the market and start posting lower losses FY21 onwards and become profitable from FY24 onwards. Analysts have termed such assumptions as overly optimistic.