BSNL seeks refund of 3G money

• Tuesday, June 15th, 2010

What looked like an advantage earlier is now turning out to be a thorn in the government’s neck. In the light of the current events the first preference given to the firms MTNL and BSNL in the allotment of the BWA and the 3G spectrums is now turning out to be a burden.

In the recent auction of the 3G spectrum in which BSNL and MTNL have participated, BSNL has now asked DOT (Department of Telecom) for a complete refund just few days after paying for the pan-India 3G spectrum holding. Post the closure of the auctions of the 3G spectrum on 19th May 2010, it has been reported by TOI on 20th May 2010 that the public sector companies MTNL and BSNL may not be in a position to pay up.

It is said that a similar request would be made by BSNL in the case of BWA, Broadband Wireless Access as well.
The managing director of BSNL, Kuldeep Goyal has written in a letter dated 31st May 2010 to the secretary of the Department of Telecom, P J Thomas asking for a refund of the complete payment, Rs 10,186.58 crore made by BSNL to the government for the 3G spectrum for pan-India. This does not include the payments made for the Mumbai and Delhi circle. 31st May 2010 was the last date for the dues payment.

There has been a similar draft that has been repaired by BSNL which talks about asking an exemption from payment of dues for the pan India BWA spectrum which amounts to roughly Rs8,313.80 crores. This is again excluding the Mumbai and Delhi circle. 22nd June 2010 is the last date for the dues payment for the BWA spectrum.

In the event of the public sector companies, MTNL and BSNL not paying up the dues will decrease the government’s revenues to Rs 50,968.3 crores from the actual revenue of Rs 67,718.9 crores for the 3G spectrum and Rs 26,695.54 crore from the actual revenue of Rs 38,543.31 crore for the BWA spectrum.

The argument put for by the managing director of BSNL with regards to refund is that BSNL did not have nay choice in the entire scheme of events, while the private telecom operators had the opportunity to make informed bids in line with their business plans.

It was also pointed out by him that the amount that is being paid by the other private operators is much lesser when compared to what BSNL has. Tata is paying Rs 5,864 crore, Bharti Airtel 5,731 Crores, , Reliance 2,021 crore, Vodafone Rs 5,054 crore, Idea Rs 5,769 crore and Aircel Rs 6,499 crore except in Delhi and Mumbai circles, as mentioned in the letter. There is one minor hitch in the letter irrespective of the sound reasons put forth by Goyal, the letter does not mention any thing about the return of the spectrum.

Experts point out that, If BSNL shows that it is interested in returning the spectrum in the circles where it dos not want to offer 3G services it would strengthen its case, later this spectrum can be made available to private players who are interested in offering 3G services in those reasons. Ability of private operators to pick the spectrum will reduce the loss incurred by the government and let BSNL chose the circles it wants to operate 3G services in, which would be more consistent with the options available and choices made by private players.

An expert mentioned that, “BSNL’s demand suggests that it wants to have its cake and eat it too”. Since last 18 months BSNL has been offering 3G services but it has not been able to add any significant number of new customers to avail the 3G services.

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