Bharat Sanchar Nigam Limited plans to double its capital expenditure to Rs 25,000 crore (Rs 250 billion) in 2005-06 to maintain a marketshare of over 50 per cent.
The state-owned service provider plans to tap the markets to raise debt for expanding its subscriber base to 250 million (Wireline, cellular and Internet) by 2007.
"From the current investment of Rs 11,000-12,000 crore (Rs 110-120 billion) in 2004-05, BSNL has chalked out plans to double this sum. The options under consideration include market borrowings and tying up with equipment manufacturers," the company's chairman and managing director AK Sinha told Business Standard in an interview.
BSNL will overtake the likes of Oil and Natural Gas Corproation and Indian Oil Corporation with an annual capex of Rs 25,000 crore ( Rs 250 billion). ONGC has planned a capex of around Rs 11,000 crore (RS 110 billion) during the current financial year, while IOC intends to spend around Rs 4,500 crore (Rs 45 billion) on capital expenditure.
The company was exploring the possibility of borrowings, using government guarantee as its debt-equity ratio could pose a problem. The company had a paid-up capital of Rs 5,000 crore (Rs 50 billion). But some BSNL executives were against the idea of government guarantees since it would raise the borrowing cost.
Sinha said the state-owned telecom major was targeting 20 million new customers a year against the present 10 million additions annually.
He added changes in equipment procurement norms would also be required to help the public sector undertaking meet its targets.
BSNL has also approached the department of telecommunications to make the necessary changes in the procurement mechanism "These issues are under discussion. Talks are on with the government," said Sinha.
The company has not gone in for market borrowings for the past few years and has been depending on internal generation of funds and reimbursement of licence fees by the government to meet its rollout requirements.
The Universal Service Obligation Fund and the collections through access deficit charge have also helped BSNL in partly meeting its capex needs.
Sinha also reiterated that the ripple effect of the Telecom Regulatory Authority of India's decision to slash ADC from February 1 would take its toll on BSNL's expansion plans.
