NEW DELHI: The past few weeks have seen the limelight shift away from state-run telcos BSNL and MTNL and on to their crisis-hit private sector counterparts. But, recent disclosures by top executives show that the two ailing PSUs may be well on their way to solving one of their most vexing problems: a bloated, unwieldy workforce.
According to statements made by their top management to the media, BSNL has seen over 77,000 employees for its voluntary retirement scheme (VRS), while the number stands at 13,500 for MTNL. This is over half their combined workforce and is expected to result in wage bill savings to the tune of over Rs 7,000 crore annually for BSNL alone.
Part of the government’s relief package for the two firms, the VRS schemes will remain open for eligible employees until December 3. “We expect more employees to opt for the schemes over next two weeks,” said a senior executive.
While the government had announced several other measures to revive the ailing PSUs, including a merger, sovereign guarantees worth Rs 15,000 crore and 4G spectrum allocation, experts had noted that the VRS scheme was a crucial first step to recovery. “With a bloated workforce of 1.76 lakh BSNL is simply uncompetitive. Only a drastic restructuring with effective VRS stands a chance of revival for BSNL and MTNL,” V K Vijayakumar, chief investment strategist, Geojit Financial Services, had noted last month.
This is because of how onerous wage bills are for the two firms, according to JM Financial’s analysts, who said that “a bloated workforce was the biggest hurdle to achieving viability”. BSNL, for instance, saw employee costs come in at a whopping Rs 14,500 crore during FY 2018-19. Or 86 per cent of its total revenues for the year. This figure stands at Rs 2,300 crore for MTNL, far beyond the Rs 2,100 crore it made as revenue in FY19. The two consequently posted losses of Rs14,200 crore and Rs 3,400 crore respectively for the fiscal.
Going forward, a merged state-run telco with 4G and 5G spectrum under its belt could well provide private sector rivals the sort of competition BSNL and MTNL has been unable to bankroll so far. But, analysts say, bringing the wage bill down is only the first step in what is likely to be a long drawn recovery trajectory. Both companies are faced with combined debt to the tune of Rs 40,000 crore.
But, despite their troubles, BSNL has been the only other telecom player apart from Reliance Jio which has been able to record consistent net subscriber additions over the past few months.