1. BSNL-MTNL merger exercise rendered it relevant, VRS issue shows

BSNL-MTNL merger exercise rendered it relevant, VRS issue shows

The merger of loss-making, state-owned telecom firms BSNL and MTNL is back on the table as the private sector players undergo consolidation in a cut-throat competitive environment.

New Delhi | Published: March 27, 2017 6:47 AM
The idea is to tap the synergy between the two firms in order for them to survive in the changed landscape. (PTI)

The merger of loss-making, state-owned telecom firms BSNL and MTNL is back on the table as the private sector players undergo consolidation in a cut-throat competitive environment. The idea is to tap the synergy between the two firms in order for them to survive in the changed landscape. However, a close look at the blueprint drawn by the department of telecommunications, way back in 2013 to tap synergies between the two to turn them around, shows that most of them have not been acted upon, in what appears to render the merger exercise irrelevant.

The biggest task identified was to cut the employee strength of the two companies by working on a voluntary retirement scheme, but not much has happened on this front so far. Sources said while the VRS issue never progressed during the UPA regime, during the current government’s regime, BSNL had estimated that it would need around R18,000 crore for its VRS programme but nothing has happened so far.

BSNL’s total employee strength is 2 lakh while MTNL employs a workforce of around 39,000. Reducing the workforce is a must for any turnaround of the two firms since for BSNL it comprises 55% of its revenues and 99% for MTNL. For private sector telecom firms like Bharti Airtel and Idea Cellular, wage bill is under 5% of their revenues. A minimum of 8% of annual increase happens in salaries of employees in BSNL and MTNL — 3% minimum by way of regular increment and 5% through dearness allowance revision. Against this, BSNL’s annual revenue growth is of 4-5% at best, which is sure to come under pressure with the entry of Reliance Jio.

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If the two PSUs are not able to come up with a VRS, they would have no option but to reduce employee strength through natural attrition. Around 15,000-17,000 employees retire each year in these firms so it may take another 3-4 years to reduce their staff strength by 70,000-80,000 to just achieve a break-even point.

Another area where not much progress has happened is making a separate tower company and monetising it. Though the NDA government has approved this measure, BSNL has not done much after that. With about 60,000 towers the valuation of it would have been around Rs 24,000 crore considering average annual rental of Rs 4 lakh a tower. An independent tower company would have enabled it to transfer surplus staff and also sell some stake to PE majors or private sector players to unlock value which could then be used to offer voluntary retirement to staffers. However, with consolidation amongst private sector players, now tower rentals are likely to come down as demand would decrease.

The biggest area where no work has taken place is in forming a separate land development and utilisation company for monetising of the land assets possessed by the two. MTNL has around 230,000 sq m of commercial land and 380,000 sq m of residential assets, which can be monetised. BSNL’s assets though not exactly computed are larger than MTNL’s.

Officials in both the companies said that unless these issues are not sorted out expeditiously, the merger is not going to yield any positive result.

  1. D
    dipak
    Aug 14, 2017 at 11:23 am
    The Cabinet of Govt. of India should immediately approve the VRS for reducing at least 50 percent employees of BSNL, whose age is 45 years and above. In addition to normal retirement benefits, instead of offering one time lump-sum amount of Ex-gratia, the Govt. should offer only 50 percent of his/her last Basic pay and D.A. on monthly basis, till his/her age of 60 years or his/her death, whichever is earlier. By this way, BSNL will definitely be benefited from the huge burden of ries to the employees every month as well as no financial help would be required to be obtained from the Govt. for offering one time lump-sum amount of Ex-gratia. Otherwise, on one fine day, the BSNL will follow the MTNL way for sure.
    Reply
    1. D
      dipak
      Jul 17, 2017 at 4:24 pm
      BSNL MTNL ARE HUGE LOSS MAKING GOVT. TELECOM COMPANIES IN INDIA. THE GOVT. SHOULD IMMEDIATELY APPROVE THE PROPOSAL FOR OFFERING VRS WITH EX-GRATIA TO THOSE EMLOYEES WHOSE AGE IS MORE THAN 45 YEARS. IN FACT, CONSIDERING THEIR HUGE FINANCIAL LOSSES, IN ADDITION TO THEIR NORMAL RETIREMENT BENEFITS, LIKE LEAVE ENCASHMENT, COMMUTATION OF PENSION, GRATUITY, INSTEAD OF OFFERING EX-GRATIA IN ONE LUMPSUM, THE GOVT SHOULD OFFER ONLY 50 PERCENT PAYMENT OF THE TOTAL EX-GRATIA AT THE TIME OF TENDERING / ACCEPTING VRS AND REMAINING 50 PERCENT AMOUNT OF THE EX-GRATIA SHOULD BE PAID TO HIM / HIS NOMINEE ON REGULAR MONTHLY E.M.I. BASIS UP TO THE AGE OF 60 YEARS, EVEN IF THE PENSIONER DIES OF BEFORE ATTAINING THE AGE OF 60 YEARS. HOPE THIS WOULD BE HELPFUL TO THE GOVT. OF INDIA. THANKS.
      Reply
      1. D
        dipak
        Jul 12, 2017 at 4:06 pm
        BSNL MTNL ARE HUGE LOSS MAKING GOVT. TELECOM COMPANIES IN INDIA. THE GOVT. SHOULD IMMEDIATELY APPROVE THE PROPOSAL FOR OFFERING VRS WITH EX-GRATIA TO THE EMLOYEES WHOSE AGE IS MORE THAN 45 YEARS. IN FACT, CONSIDERING THEIR HUGE FINANCIAL LOSSES, IN ADDITION TO THEIR NORMAL RETIREMENT BENEFITS, LIKE LEAVE ENCASHMENT, COMMUTATION OF PENSION, GRATUITY, THE GOVT SHOULD OFFER ONLY 50 PAYMENT OF THE TOTAL EX-GRATIA AT THE TIME OF TENDERING VRS AND REMAINING 50 SHOULD BE PAID TO HIM / HIS NOMINEE ON REGULAR MONTHLY BASIS UP TO THE AGE OF 60 YEARS, EVEN IF THE PENSIONER DIES OF BEFORE ATTAINING THE AGE OF 60 YEARS. HOPE THIS WOULD BE HELPFUL TO THE GOVT. OF INDIA. THANKS.
        Reply
        1. D
          dipak
          Jul 12, 2017 at 3:20 pm
          BSNL MTNL ARE HUGE LOSS MAKING GOVT. TELECOM COMPANIES IN INDIA. THE GOVT. SHOULD IMMEDIATELY APPROVE THE PROPOSAL FOR OFFERING VRS WITH EX-GRATIA TO THE EMLOYEES WHOSE AGE IS MORE THAN 45 YEARS. IN FACT, CONSIDERING THEIR HUGE FINANCIAL LOSSES, IN ADDITION TO THEIR NORMAL RETIREMENT BENEFITS, LIKE LEAVE ENCASHMENT, COMMUTATION OF PENSION, GRATUITY, THE GOVT SHOULD OFFER ONLY 50 PAYMENT OF THE TOTAL EX-GRATIA AT THE TIME OF TENDERING VRS AND REMAINING 50 SHOULD BE PAID TO HIM / HIS NOMINEE ON REGULAR MONTHLY BASIS UP TO THE AGE OF 60 YEARS, EVEN IF THE PENSIONER DIES OF BEFORE ATTAINING THE AGE OF 60 YEARS. HOPE THIS WOULD BE HELPFUL TO THE GOVT. OF INDIA. THANKS.
          Reply
          1. D
            dipak
            Jun 17, 2017 at 3:23 pm
            WITHOUT WAITING FOR A MOMENT, THE CABINE, GOVT. OF INDIA SHOULD IMMEDIATELY APPROVE THE BSNL'S MTNL'S PROPOSAL FOR REDUCING THEIR WORKFORCE BY OFFERING VRS WITH EX-GRATIA TO THE EMPLOYEES ABOVE THE AGE OF 45 YEARS. OTHERWISE, THE BSNL MTNL WILL BECOME THE NEXT AIR-INDIA, HMT, ITI.....ETC . ETC...
            Reply
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