The Union Cabinet has allowed the cash-strapped state-run telecommunications firms Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) to return the broadband wireless access spectrum they got in 2010 and get refunds worth Rs 11,258 crore ($1.8 billion).

BSNL and MTNL will get refund of Rs 6,724.51 crore and Rs 4,533.97 crore, respectively, in a staggered manner, Information and Broadcasting Minister Manish Tewari told media on Thursday after a meeting of the Cabinet. 

“The refund will be made to ensure support for the revival and revitalisation of BSNL and MTNL in the competitive telecom sector. It shall also help these PSUs to arrange finances to meet basic financial commitments such as operation and maintenance of their telecom network,” according to a statement.

BSNL had got BWA spectrum—used to offer fourth generation (4G) or long-term evolution (LTE) services—to offer services in six circles, including Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu and Kolkata, while public listed MTNL, which operates in Mumbai and Delhi circles, had received the spectrum for the two cities. 

BSNL and MTNL had requested the government to refund for the BWA spectrum, which they have not yet used. Notably, the two firms did not take part in the spectrum auction and were asked by the government to match the price paid by the successful bidder for the airwaves.

Mukesh Ambani-led Reliance Jio, erstwhile Infotel Broadband Services Pvt Ltd, was the only company that had won BWA spectrum in all 22 circles in India, by paying Rs 12,848 crore in 2010. It is said to be in the process of launching its services. Bharti Airtel has already launched its services in few circles. 

In the financial year 2012-13, the two companies had together incurred a loss of over Rs 14,000 crore, bulk of it was by BSNL. MTNL, which has been in the red since FY10, itself posted net loss of Rs 5,321 crore.

The companies can now use the money to be refunded to bring down their mounting debt and strengthen their existing 2G and 3G business.

The proposal to refund the one-time upfront charges paid by BSNL and MTNL was sent by the Group of Ministers, headed by Finance Minister P Chidambaram, to the Cabinet, with a view to save the companies from incurring losses.

(Edited by Joby Puthuparampil Johnson)

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