The Hindu Business Line : BSNL seeks reduction in equity base

THE Rs 33,000-crore telecom major Bharat Sanchar Nigam Ltd has sent a proposal to the Government seeking a reduction in its equity base from the current Rs 5,000 crore to about Rs 3,000 crore.

The move is aimed at ensuring more cash availability for BSNL's investments and it comes at a time when the company is discussing listing on the stock exchange as part of the merger plan with Mahanagar Telephone Nigam Ltd.

"BSNL has one of the highest equity base among public sector companies. This results in high outflow of money in the form of dividends and payouts to the Government, which ideally should be ploughed back into the telecom sector. We have requested the Government to reduce the equity and convert the rest into loans," Mr S.D. Saxena, Director (Finance), BSNL, told Business Line.

BSNL paid Rs 481 crore last year to the Government as dividend and other payouts. The company is 100 per cent state-owned and was corporatised in 2000.

While the Government has equity worth Rs 5,000 crore in BSNL, it has Rs 15,000 crore as loans and a chunk as reserves.

The company's net worth is over Rs 70,000 crore. Mr Saxena said BSNL was paying close to Rs 8,000 crore annually to the Government as licence fee, spectrum charges and various taxes.

Of this, the company was reimbursed Rs 2,000 crore as part of the agreement with the Government at the time of corporatisation.

BSNL plans to increase its investments in 2005-06 to Rs 9,696 crore compared to Rs 8,109 crore the previous year. Of this, Rs 1,645 crore will be raised through loans, while the remaining Rs 8,051 crore will be through internal accruals.

Mr Saxena said BSNL was geared to meet the challenges of a competitive market and, at the same time, fulfil its social responsibility as a public sector company.

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