NEW DELHI: The Group of Ministers (GoM) recently set-up to map out a revival plan for struggling state-run telecom majors BSNL and MTNL met on Tuesday to discuss measures to help revive the ailing firms. The high-powered GoM is headed by Union Home Minister Amit Shah and includes telecom minister Ravi Shankar Prasad and finance minister Nirmala Sitharaman, among others.
Among the measures discussed was a Voluntary Retirement Scheme (VRS) for employees to reduce the wage bills of the two telecom firms, sources said. However, they were not aware of any final decision taken in the matter. Both firms have a large employee base, with wage costs taking out a significant chunk out of their revenues.
According to telecom minister Prasad, the annual employee cost of BSNL is a whopping 75 per cent of its annual revenues, while the number is even higher at 87 per cent for MTNL. This has made the two companies extremely uncompetitive vis-avis their private sector peers, who, according to Prasad, have total employee costs ranging between just 2.9-5 per cent of their total revenues.
This huge employee base, combined with intense market competition and increasing debt, has hit the margins of both firms hard. BSNL’s net loss had increased to Rs 13,804 crore in 2018-19 from a net loss of Rs 7,992 crore the previous financial year. The company has not posted an operating profit since 2007-08, with net losses accumulating to over Rs 90,000 crore as of the end of 2018-19 with a total debt of over Rs 13,000 crore. MTNL has fared no better than its bigger counterpart, with its net loss increasing to Rs 3,398 crore in 2018-19 from Rs 2,971 crore in 2016-17.
Both firms have also faced severe cash flow problems over last few quarters, with BSNL delaying salary payments several times. In fact, the company had approached the government to help pay salaries in both March and June, stating that the gap between monthly revenues and expenses has reached to such a level that continuing operations would be nearly impossible without assistance.
Employees protest
The GoM meeting was held on the same day employee unions representing staff of both firms sat on a dharna seeking the immediate payment of pendingsalaries and a relief package for 2the sibling firms.