BSNL's profits are likely to take a hit in 2005-06 as reimbursements from the government towards licence fee and spectrum charges are slated to be reduced by 60 per cent during fiscal year 2005-06.

BSNL will reportedly receive only about Rs 7 billion in reimbursements and write-backs for 2005-06 against Rs 20 billion in the previous year. Moreover, BSNL would no longer be the sole recipient of grants from the USO Fund as the Rs 12 billion allotted for the fund this fiscal will be split among telecom operators who have won bids to provide fixed line services in the rural areas.