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    BSNL raises Rs 8,500 crore via bonds, expects 4G airwaves soon

    Synopsis

    BSNL would use the proceeds to repay debt and fund expansion as it aims to regain market share in a sector that’s consolidated and now has only three private operators.

    BSNL---AgenciesAgencies
    Top institutional investors such as HDFC Bank, ICICI Bank, Axis Bank, State Bank of India, and ICICI Primary Dealers are said to have bet on those debt securities backed by a central government guarantee.
    NEW DELHI/MUMBAI: State-run telecoms service provider Bharat Sanchar Nigam Ltd on Monday raised Rs 8,500 crore via its maiden local bond sale that obtained bids double the actual size.

    Top institutional investors such as HDFC Bank, ICICI Bank, Axis Bank, State Bank of India, and ICICI Primary Dealers are said to have bet on those debt securities backed by a central government guarantee.

    BSNL would use the proceeds to repay debt and fund expansion as it aims to regain market share in a sector that’s consolidated and now has only three private operators.

    "It's a big occasion for BSNL and despite Covid-induced lockdown and slow economic activity, we were able to successfully raise bonds," its chairman Pravin Kumar Purwar said.

    "We have not only increased subscribers, but our market share has increased to 11.38% today, and we are hoping to become Ebitda (earnings before interest, taxes, depreciation, and amortisation) positive in 2021," he said.

    On July 22, ET had reported that BSNL would raise the sum through its first ever bond sale.

    “This is the largest corporate bond sale so far this financial year,” said Ajay Manglunia, managing director and fixed income head at JM Financial. “The issuance saw twice the actual size in bidding interest from investors as the bonds are backed by a government guarantee."

    The bonds – offering 6.79% coupon with 10-year maturity – attracted 229 bids worth as much as Rs 17,183 crore. Bonds worth Rs 3,700 crore were subscribed by qualified institutional investors such as ICICI Lombard, Punjab & National Bank, Postal Life Insurance, and SBI Life Insurance. State Bank of India and ICICI Primary Dealership are said to have invested Rs 1,500-1,600 crore each.

    Individual investors could not be contacted for comments immediately.

    The BSNL chairman said he expects the government to soon allocate fourth-generation or 4G spectrum to the state-owned telco. A committee headed by the telecom department's member (technology) had recently submitted its views on the issue.

    Purwar also said the company is in the process to revisit its 5G trial strategy in the wake of the standoff between Indian and Chinese troops along the Line of Actual Control in the Ladakh valley.

    BSNL had signed a memorandum of understanding (MoU) with Chinese firm ZTE in September 2017 to work together on 5G wireless technology for research and knowledge-sharing purposes.

    The Union cabinet had in October last year approved a rescue plan for state-owned telcos BSNL and Mahanagar Telephone Nigam Ltd that included sovereign bonds issues, a voluntary retirement scheme (VRS) for employees, and allocation of fourth-generation (4G) airwaves.

    The VRS proved to be successful with more than 78,000 employees opting for it, helping BSNL save nearly 50% in salary outgo.

    The remaining issues will be addressed within the next 30 days, Purwar said.

    BSNL has identified 14 land parcels for its asset monetisation programme and is expected to garner Rs 18,000 crore within a year.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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