Nokia may abandon BSNL if it is not paid

Details: Vaughan O'Grady; Category: Business; 06 August 2020; 7028 views

Following yesterday’s news that a number of kit vendors may not be taking new orders for 4G equipment from Vodafone Idea due to concerns about recovering payments comes news that Nokia may pull out of its relationship with BSNL.

Nokia is one of the biggest suppliers for Bharat Sanchar Nigam Limited’s mobile networks, which connect over 120 million people across India with voice and data services.

According to Indian news reports, Nokia says it is owed about $120 million for base stations, software and other network infrastructure components by BSNL and wants the outstanding payment – plus interest – cleared immediately.

As Nokia is responsible for around 40 per cent of BSNL’s network equipment, this threat – if serious – could have major consequences. Ongoing maintenance of installed BSNL equipment would be hit. It could also mean Nokia has to make job cuts among employees working on the BSNL account.

BSNL has apparently offered more than one commitment to payment, only to default. Non-payment is only part of the story, however. Nokia notes that its finances have been affected by the ongoing pandemic – but, that, presumably, makes it even more imperative that the company gets paid.

As a market player BSNL has a strong presence in fixed-line services but is a distant fourth among mobile operators. In addition BSNL is not new to non-payment problems. Late last year vendors that had sold goods or services to BSNL and MTNL were said to be considering insolvency pleas against the state-run operators after non-payment of dues.

Before this, in October 2019, the Indian government announced a revival package for BSNL and MTNL which included monetising assets, raising funds, a voluntary retirement scheme for employees and, finally, a merger of the two companies. Judging from Nokia’s complaints, BSNL may still be some way from being on a sound financial footing.