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Eyeing ‘turnaround’, BBNL to merge with BSNL by month-end

The merger of Bharat Broadband Network Limited (BBNL) and Bharat Sanchar Nigam Limited (BSNL) will be completed this month, the latter’s Chairman and Managing Director, P K Purwar, has said.

Speaking at an event earlier this month, Purwar said the government had already taken the “policy decision” to merge BBNL and BSNL and that the process was scheduled to be completed before March 31.

“BBNL is going to be merged in BSNL. This means that all of BharatNet work being done on an India basis will come to BSNL. The government has taken this policy decision,” Purwar said at an event organised by All India Graduate Engineers and Telecom officers Association (AIGETOA).

The Indian Express had on January 9 reported that the government had decided to merge BBNL and BSNL by the end of this fiscal and that the latter was likely to finish BharatNet work, started by BBNL.

BBNL, a special purpose vehicle (SPV) of the Ministry of Communications, was incorporated in 2012 as a public sector unit. It was handed over the task of implementing the BharatNet project, which was till then known as National Optical Fibre Network (NOFN). The SPV is funded from the Universal Service Obligation Fund (USOF), which is raised from a Universal Access Levy (UAL) applicable to all telecom licence holders. It came into effect from April 1, 2002 and mandated that all telecom service providers must pay a percentage of their revenue into the USOF. During the event organised by AIGETOA, Purwar said telecom minister Ashwini Vaishnaw had called him up to discuss the details of the merger and asked him to “take over” BBNL before March 31.

Explained

What does BBNL do?

BBNL, a special purpose vehicle of the Ministry of Communications, was incorporated in 2012 as a public sector unit. It was handed over the task of implementing the BharatNet project. The SPV is funded from the Universal Service Obligation Fund, which is raised from a Universal Access Levy applicable to all telecom licence holders.

“The Minister told me that we have a free hand to shape the turnaround. In the Budget, provision of around Rs 45,000 crore has been made for BSNL. It was earlier Rs 24,000 crore. Earlier provision was only for spectrum. Now, it is spectrum, capex and others. So the government wants to give you a free hand. Can you perform?,” Purwar said, adding that BSNL was in the final stages of 4G testing and and may soon started ground-level network testing and deployment.

“The government is going against its stated policies (for BSNL) and wants to give a chance to become a strategic asset. We have to prove ourselves,” he said while addressing the gathering.

Some officials from BBNL have, however, expressed their reservations against the proposed merger, saying the merger of the company with BSNL will give the latter direct access to the USOF, which is likely to “create controversy and impropriety issues”.

“All telecom operators contribute to the USOF. So if the government goes ahead with this merger, it will seem like only BSNL will get to use the fund. That could create problems for us,” a senior DoT official said, asking not to be named.

As per telecom licence agreements, telecom service providers have to pay 8 per cent licence fee on their revenue from sale of telecom service, of which 5 per cent goes towards the USOF.

With the merger of BBNL and BSNL, this fund — which currently stands at close to Rs 60,000 crore — is likely to go to BSNL and help the state-run telco come out of its crunch.




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