The state-owned Bharat Sanchar Nigam Ltd, is likely to slip into the red in 2003-04 following the rejection of its plea for licence fees and spectrum charges reimbursement by the Union Cabinet.
BSNL officials said the company was expecting a total revenue of Rs 24,000 crore (Rs 240 billion) for 2003-04, while its projected expenditure including depreciation, salary bill, interest payment etc, would be around Rs 20,000 crore (Rs 200 billion).
Bulk of this will have to be used for paying licence fees and spectrum charges which, according to officials, will be around Rs 3,000-Rs 3,200 crore (Rs 30-32 billion) for the current year along with another Rs 1,000 crore (Rs 10 billion) as pension outgo. This would wipe out the surplus entirely.
Chairman Prithipal Singh said, "We are examining the situation but the decision will definitely affect our bottomline adversely."
The telecom major will also have to shell out additional amounts on account of excise duty, and service tax. These will force the company go into the red.
Last year BSNL had to shell out Rs 550 crore (Rs 5.50 billion) as corporate tax, Rs 50 crore (Rs 500 million)as excise duty and Rs 1,000 crore for pensions over and above the estimated expenditure.
The telecom major recently received another major blow from the government where the latter declined to foot the telecom major's pension bill, aggregating over Rs 1,000 crore in the current fiscal.
For 2003-04 BSNL had projected a financial burden of over Rs 7,000 crore (Rs 70 billion). Of this, around Rs 4,000 crore (Rs 40 billion) was on account of taxes, loan servicing and dividends payments. This figure was expected to rise to Rs 9,054 crore (Rs 90.54 billion) in 2004-05.
Officials also said post corporatisation, the telecom major had to undertake an additional burden of Rs 40,000 crore (Rs 400 billion) over the next five years.
BSNL bottomline was under pressure owing to decreasing tariffs. It lost nearly Rs 3,000 crore (Rs 30 billion) owing to steep reduction in STD tariffs in 2002 and is expected to further take a hit with recent cut in STD rates from Rs 9 a minute to Rs 4.80 a minute for calls above 500 km.
The company has already lost 20-25 per cent of STD traffic to cellular firms owing to lower cell-to-cell STD tariffs. The recent roll-back of tariff, according to the government, will cost BSNL another Rs 3,476 crore (Rs 34.76 billion) this year.
BSNL operated around 10 million rural telephones and 50 per cent of its urban connections were non-profitable. Recent tariff revisions to restore viability were rolled back under political pressure.
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