Government's objectives to set up nearly 600,000 rural phones could be in serious jeopardy with Bharat Sanchar Nigam Ltd threatening to scale down its obligations to set up phones in villages.
BSNL move follows finance ministry's decision to disallow any fresh support to the public sector.
Senior BSNL officials told Business Standard that though the PSU would try to cover as many villages it can, it would not pursue loss making ventures any more.
"We will have to scale down the village telephone targets if we have to remain profitable. Without government support, it is obvious that we will not be able to cover all the villages."
"Officials said that BSNL could have gone for external funding but that would have been possible only if the project was a profitable one.
"Village phones are generally loss making projects so it will not make business sense to borrow," officials said.
Of the 607491 villages in the country, 513880 have been covered by BSNL. Thus about 93611 villages are still without a phone. The cost per phone is about Rs 175,000, which means the entire project would require Rs 425 crore (Rs 4.25 billion).
In addition BSNL is required to replace about 145780 village phones which would need another Rs 656 crore (Rs 6.56 billion).
This apart BSNL had planned an aggressive roll out of telephones to meet the tele-density targets set by the New Telecom Policy 1999.
BSNL had also sought support for providing below cost tariffs for basic phone services. Attempts to rationalise tariffs was rolled back due to political pressures.
In order to meet the expenses BSNL had sought a full reimbursement of licence fee and spectrum charge amounting to Rs 2300 crore (Rs 23 billion) per year to ensure 10 lakh (1 million) phone lines per year in rural sector.
BSNL had also sought moratorium on repayment of principal and interest on government loan to BSNL through the 10th plan period.
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