Both say they are in serious financial trouble and do not have the money required but they do need the additional spectrum to "serve their customers".
The move by the two public sector telecom giants could upset the government's plans to earn about Rs 40,000 crore this financial year from one-time fee for additional spectrum with incumbent players and the 2G spectrum auction.
The two PSUs were to account for a substantial portion of the Rs 27,000 crore the government expected to get in one-time fee from incumbent operators with more than 4.4 MHz of GSM spectrum (and more than 2.5 MHz CDMA spectrum). The payment has to be made prospectively. The decision was taken by the empowered group of ministers (EGoM) on telecom in its last meeting on October 8.
Endorsing the demand, the DoT has decided to put the ball in the court of the said EGoM, headed by Finance Minister P Chidambaram. It has said considering the financial difficulties faced by the two PSUs, it will put up a request for in-principle approval from the EGoM and then from the Cabinet for financial support to both PSUs. It has said the amount and manner of phasing the support could be decided between the DoT and the finance ministry later.
In 2011-12, BSNL made losses of about Rs 8,800 crore and MTNL Rs 4,100 crore. BSNL had gone to the government with a proposal to return its broadband wireless access licence in 13-14 circles, for which it had paid Rs 8,300 crore.
BSNL has more than 4.4 MHz GSM spectrum in 20 circles. In 15 of those, it has more than 10 MHz, the highest spectrum available with any operator.
In his letter, R K Upadhyay, chairman of BSNL, has said the company has already made a significant investment in rolling out the network to utilise that spectrum but "due to its present financial condition, BSNL is not in a position to pay any additional amount for retention, though the spectrum is essential to serve customers". He has conceded the company is willing to return its additional CDMA spectrum in Kerala, where it has 3.75 MHz.
MTNL Chairman A K Garg has said it has 12.4 MHz GSM spectrum in Delhi and Mumbai and also made significant investments to utilise it.