Finance Minister Pranab Mukherjee has rejected the proposal of Telecom Minister A Raja to refund 3G and BWA spectrum fees of state-owned telecom service providers Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), according to the Business Standard reports. The FM is believed to have cited legal complications to turn down the request.

Both BSNL and MTNL were kept out of auction process and allotted 3G and BWA spectrums much ahead of private players, stipulating that they will pay the fees commensurate with that paid by auction winners. To this end BSNL paid Rs 10186.58 crore for 3G and Rs 8313.8 crore for BWA, while MTNL paid 6564 crore for 3G and Rs 4533.97 crore for BWA. Both PSUs had to avail loans to meet the government deadline for fee payment.

Despite making the payment, both PSUs have been asking for a refund of the amount as they were allotted unremunerative segments, unlike private players, who chose lucrative zones. However, Mr. Mukherjee turned down the proposal for refund of Rs 29,598 crore after a 10-minute meeting with Telecom Minister on Friday. It is believed that the FM was not willing to reconsider the proposal even after Mr. Raja suggested a staggered payment.

The staff unions of both BSNL and MTNL have threatened to go on a three-day strike from 21 September, in the event of rejection of refund proposal. The unions are also planning to follow this up with indefinite strike to make the government accept the request.

Meanwhile, Mr. Raja is said to be working on an alternative proposal to recover the losses suffered by the state-owned telecom providers from providing services in rural areas. The present subsidy that BSNL receives from the Universal Service Obligatory Fund (USOF) towards offering services in rural areas is believed to be insufficient to compensate the losses.