The Department of Telecom has sent a communication to the sector regulator TRAI seeking its views on the possibility of giving 4G spectrum to BSNL outside auction under a preferential equity infusion route.

This is being done in view of the Supreme Court earlier judgement that all natural resources be sold through auction only. The regulator will now examine whether government-controlled entities could be an exception to the rule set by the apex court.

In a communication to TRAI recently, the DoT sought its views if 4G spectrum can be given to BSNL outside auction as the PSUs do not participate in the bidding process, official sources said.

In 2012, in a landmark judgement, the apex court had said all natural resources should be sold through bidding for maximisation of value.

BSNL currently has 5Mhz of the spectrum on 800 Mhz band . But for an all India scaling- up of 4G service rollout , it needs at least a cumulative 10Mhz radiowaves. In Rajasthan, the PSU will use 4G spectrum which it has on 800 Mhz bands as per the plan.

Sources added DoT will abide by whatever views TRAI will give "but let's see what the regulator says".

Digital Communication Commission, the inter-ministerial panel had advised to DoT to take the comments of TRAI on this issue in view of the Supreme Court judgement that spectrum cannot be allocated to telecom service providers without auction.

BSNL, which operates all over India sans Delhi and Mumbai, has been seeking 5Mhz of 4G spectrum on 2100 Mhz band for which it had sent a proposal approved to DoT. It intends to acquire 4G spectrum worth about Rs 13,885 crore.

The mechanism suggested by BSNL is: 50 per cent payment will be done upfront and rest 50 per cent will be made in 10 equal instalments. The upfront payment that BSNL wants is to be met through the equity route where the government will be given preferential equity in lieu of the spectrum valued at Rs 6942.5 crore.

TRAI's views may take at least one-and-a-half months, sources said, adding thereafter it will be easier for DoT to convince the finance ministry if TRAI gives go-ahead for this move. The Finance Ministry has been seeking the usefulness of such huge capital infusion in BSNL so has the Niti Aayog.

BSNL is currently going through its worst financial crisis and it recently sought the government's support to pay February salary of its employees. The company is banking heavily on TRAI's positive comments.

A draft report of IIM-Ahmedabad also suggested the government to give 4G spectrum to BSNL to survive in the hyper-competition. BSNL offers 2G and 3G services has 11 crore mobile subscribers and gets a number of government projects from which it draws revenues. But post-Jio entry in the sector, cut-throat competition has made private telcos lose profits and consolidate to survive.

Keeping BSNL afloat has become more challenging with the absence of a full bouquet of services. After Jio, it is the only operator which has been adding subscribers but not enough to generate revenues since these subscribers are from low voucher category.

The PSU though was the last entrant in the fast emerging revenue opportunity of FTTH (Fibre-to-the-Home ) segment, without proper planning, it lost the edge to Jio which entered much later. The PSU's enterprise services another money minting business has also seen sluggish growth. For the year 2017-18, the PSU posted a loss of about Rs 8000 crore.

Disclaimer:

RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.