BSNL Raises 8,500 Crore through Sovereign Guarantee Bonds, Ready to Clear the Debt

Bharat Sanchar Nigam Limited (BSNL), the state-owned telecommunications company has raised 8,500 crore through issuance of sovereign guarantee bonds, with a maturity of 10 years. The funds raised will be utilized for debt refinancing and meeting the capex requirements.

The government has approved 8,500 crore sovereign guarantee bonds for the revival of the telecom PSU. Top institutional investors including HDFC Bank, ICICI Bank, Axis Bank, State Bank of India, ICICI Primary Dealers are said to have bet on those debt securities, backed by a government of India guarantee.

“It’s a big occasion for BSNL and despite Covid-induced lockdown and slow economic activity, we were able to successfully raise bonds,” stated Pravin Kumar Purwar, Chairman, BSNL. “We opened the bond at 10.30 am and closed at 12 pm. The bond was subscribed over two times. We were able to get bids of over 17,170 crore but we accepted only 8,500 crore as per the approved bond size,” adds Pravin.

“We have not only increased subscribers but our market share has been increased to 11.38 percent today, and we are hoping to become Earnings before interest, taxes, depreciation, and amortization (EBITDA) positive in 2021,” says Pravin.

“This is the largest corporate bond sale so far this financial year,” stated Ajay Manglunia, Managing Director and Head - Fixed Income, JM Financial. He further added “The issuance saw twice the actual size in bidding interest from investors as the bonds are backed by a government guarantee.”

In September 2017, BSNL entered into a partnership with ZTE, and the two companies signed a memorandum of understanding (MoU) to work together on 5G wireless technology for research and knowledge-sharing purposes. The telco has identified as many as 14 land parcels as a part of the assets monetization scheme and is expected to garner 18,000 crore within a year. The voluntary retirement scheme (VRS) proved to be successful and the remaining issues will be addressed within the next 30 days, he added. More than 78,000 employees opted for the voluntary scheme making BSNL save nearly 50 percent in salary outgo. In October last year, the Cabinet had approved the rescue plan of two state-owned telcos BSNL and Mahanagar Telephone Nigam Limited (MTNL) that included sovereign bonds in addition to a virtual retirement scheme (VRS) and allocation of fourth-generation (4G) airwaves to turn a corner for the stressed companies.

Bharat Sanchar Nigam Limited (BSNL), the state-owned telecommunications company has raised 8,500 crore through issuance of sovereign guarantee bonds, with a maturity of 10 years. The funds raised will be utilized for debt refinancing and meeting the capex requirements.

The government has approved 8,500 crore sovereign guarantee bonds for the revival of the telecom PSU. Top institutional investors including HDFC Bank, ICICI Bank, Axis Bank, State Bank of India, ICICI Primary Dealers are said to have bet on those debt securities, backed by a government of India guarantee.

“It’s a big occasion for BSNL and despite Covid-induced lockdown and slow economic activity, we were able to successfully raise bonds,” stated Pravin Kumar Purwar, Chairman, BSNL. “We opened the bond at 10.30 am and closed at 12 pm. The bond was subscribed over two times. We were able to get bids of over 17,170 crore but we accepted only 8,500 crore as per the approved bond size,” adds Pravin.

“We have not only increased subscribers but our market share has been increased to 11.38 percent today, and we are hoping to become Earnings before interest, taxes, depreciation, and amortization (EBITDA) positive in 2021,” says Pravin.

“This is the largest corporate bond sale so far this financial year,” stated Ajay Manglunia, Managing Director and Head - Fixed Income, JM Financial. He further added “The issuance saw twice the actual size in bidding interest from investors as the bonds are backed by a government guarantee.”

In September 2017, BSNL entered into a partnership with ZTE, and the two companies signed a memorandum of understanding (MoU) to work together on 5G wireless technology for research and knowledge-sharing purposes. The telco has identified as many as 14 land parcels as a part of the assets monetization scheme and is expected to garner 18,000 crore within a year. The voluntary retirement scheme (VRS) proved to be successful and the remaining issues will be addressed within the next 30 days, he added. More than 78,000 employees opted for the voluntary scheme making BSNL save nearly 50 percent in salary outgo. In October last year, the Cabinet had approved the rescue plan of two state-owned telcos BSNL and Mahanagar Telephone Nigam Limited (MTNL) that included sovereign bonds in addition to a virtual retirement scheme (VRS) and allocation of fourth-generation (4G) airwaves to turn a corner for the stressed companies.

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