Telecom department plans to revive BSNL and MTNL

Both the telecom companies are likely to undergo restructuring.

Published: 22nd February 2019 11:36 AM  |   Last Updated: 22nd February 2019 11:36 AM   |  A+A-

BSNL-Reuters

Image used for representational purpose only.

Express News Service

NEW DELHI: The Department of Telecommunications (DoT), in a meeting on Thursday, deliberated on revival of two of its struggling PSUs - Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) - to ensure survival amid intense competition.

During the meeting, the Digital Communications Commission (DCC), the apex decision-making body of DoT, asked the two companies to elaborate on their turnaround strategy — how they would come back to profitability and foresee achieving revenue goals.

“What was impressed upon the DCC was that DoT believes that both the ailing firms operate in the strategic sector, and have a large legacy of staff and a strong asset base. So, restructuring will be essential for the revival being planned,” said sources.

The Voluntary Retirement Scheme (VRS) based on Gujarat model has appeared to be attractive to both telcos. The telecom department is considering the issue of 10-year bonds to fund the firms’ VRS plans to bring down their rising debt, while their land assets would be monetised through lease handled by the institutional mechanism. 

In the case of MTNL, sources said, it was estimated that over the next five years, about 16,000 employees will retire. So, with VRS, their exits will be accelerated a bit and that the task of bringing back the company to health becomes faster. 

For BSNL, 75,000 employees are expected to possibly retire in natural course. This might help the organisation, whose wage bill is 60 per cent, to come back to a sound financial position. In case of MTNL, the HR bill is 85-90 per cent of the revenue.

MTNL sought Rs 4,130 crore worth of VRS refund on account of interest cost borne on Broadband Wireless Access (BWA) spectrum for 4G services and assets monetisation, while BSNL wanted VRS along with monetisation of land parcels that could pump in at least Rs 90,000 crore. 

However, the government estimates that the VRS would cost Rs 2,100 crore and Rs 6,365 crore to the exchequer for MTNL and BSNL, respectively.

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