First Indian government pay-out will help BSNL clear debts to vendors

First Indian government pay-out will help BSNL clear debts to vendors

The Indian government has apparently released the first tranche of the recently announced Rs1.64 lakh crore (over US$20 billion) revival package it has agreed to give the state-owned operator Bharat Sanchar Nigam Limited (BSNL).

The Rs 5,000 crore (US$626.6 million) tranche will be used to clear the company’s dues to its vendors, a process that is expected to start within the next 15 days.

The news channel CNBC-Awaaz, which first reported this, suggested that many of the vendors have been awaiting payment for two years. This could be an underestimate. Indeed we reported in November 2019 that some vendors were considering insolvency pleas against BSNL and its fellow state-run operator Mahanagar Telephone Nigam Limited (MTNL) after non-payment of dues. Then, in April 2020, the DoT was being asked to intervene in the ongoing debt issues facing the two state-owned operators.

At the time operator group the COAI estimated total outstanding dues from these state-controlled companies at around $2.6 billion, though it’s unclear how much of this remains unpaid.

Still, a number of local gear vendors and tower companies, both of which are likely to benefit from the first tranche, should be happy. India’s Economic Times says ITI Limited (ITI) is the biggest vendor for BSNL, but also lists Tejas Networks, HFCL, VNL and STL among others.

This will be the first stage in a revival programme expected to take four years, after which the government expects BSNL to be profitable by FY 2026-27.

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