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G. Rambabu

NEW DELHI, July 18

THE drastic cuts in STD tariffs in force since mid-January has had a telling impact on telecom majors Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), with call revenues in the last quarter of fiscal 2001-02 (January-March 2002) falling by between 16 and 20 per cent compared to the preceding quarter.

According to official sources, the quarterly performance of both the companies, which came up for review before the Telecom Commission showed that the 62 per cent cut in STD call rates has directly affected both the companies, with BSNL taking a bigger hit due to the larger scale of its operations. While it has suffered a decline of over 20 per cent in its call revenues during the quarter, MTNL has suffered a 16 per cent decline in its revenues.

The sources noted that since a large part of the accruals of both the companies (over 40 per cent) come from long distance calls, the downward revision in STD tariffs has had a direct impact on their revenues. The increase in traffic needed to compensate it for their revenue loss has been quite slow in coming. There has only been around 25 to 30 per cent increase in STD traffic since the rate-cut, much below the expected levels of above 60 per cent.

For BSNL, in particular, which currently earns close to Rs 12,000 crore from NLD calls, if the increase in call volumes continues to remain at the current levels, it will not be able to offset the losses on this count.

As regards MTNL, the sources noted that apart from the decline in STD revenues, the company has the added problem of increase in tax liabilities and licence fees by 223 per cent and 32 per cent, respectively, the fiscal year 2001-02. This is expected to rise further during the current year, seriously hampering its operations.

They pointed out that as per the performance review presented before the commission, the licence fee during the year ended March 31, 2002, has gone up to Rs 694.14 crore compared to Rs 361.53 crore in the previous year. This was due the revision of licence fee from Rs 900 per working DEL to the revised method of calculation which is 12 per cent of adjusted gross revenue with effect from April 2001. Since the new licence fee structure will continue to hold this year, the outgo on this count will only increase, they said.

As for the tax liability of the company, it has gone up from Rs 163 crore during the year ended 31 March 2001, to Rs 527 crore during 2001-02, an increase of Rs 364 crore. This is due to the provision of income tax which had been worked out claiming 30 per cent income tax benefit under Section 80IA of the IT Act. It was exempted 100 per cent during the previous years, but this exemption has been reduced to 30 per cent, the sources added.

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