FE Editorial : Don’t bail out MTNL/BSNL

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The Financial Express: Jan 31 2013, 21:12 IST

the 4th largest mobile operator in rural areas after Airtel, Vodafone and Idea and its share in the rural market is roughly half of Airtel’s. BSNL also gets subsidies for its fixed line services from the USO Fund. As far as refunding money given by the two PSUs for their broadband spectrum, keep in mind the auction rules specifically ruled this out. Also, if a refund is to be made, and the government doesn’t get the same money in a re-auction, who is going to make this whole?

And, were such refunds to be given, would this make either PSU viable? BSNL posted a loss of R8,850 crore in FY12 and MTNL R4,018 crore—while BSNL has indicated its FY13 revenues will be 9% less than in FY12, MTNL’s first half losses of R2,151 crore are 26% higher than they were in the same period last year. Neither PSU is a hit with customers—only 55% of BSNL’s subscriber base is active and the figure is under 40% for MTNL, while that for the top 3 private telcos is over 93%. While private telcos service 1 million customers for every MHz of spectrum they have, the PSUs service just 0.37 million—this means the PSUs have way too much spectrum. Neither has any turnaround strategy that goes beyond trying to earn revenues from non-core areas like renting and leasing of real estate space, towers, and leasing of the CDMA network. MTNL, for instance, hopes to get R10,000 crore through sales of land assets—it has

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Reader's Comments (3)| Post a Comment

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Narendra M Apte | 31-Jan-2013Reply | Forward

In almost all Public Sector Undertakings (PSUs), one common feature is that there is surplus staff. Two telecom PSUs, BSNL and MTNL, are no exception to this scenario. When there was no competition both these companies were earning monopoly profits and customer service was poor. After entry of private sector, two companies have lost market share rapidly. But one reason other than surplus staff, of these companiesâ€™ poor financial performance is lack of freedom to take business decisions at the right time on account of ministerial and bureaucratic interference. But let us not forget here that one or two former ministers who were in charge if Telecom ministry are responsible partly for sorry sate of affairs in both MTNL and BSNL. As pointed out in edit, it is now too late and these PSUs may never be able to turn a profit. But your suggestion that the government must exit these PSUs is unlikely to be even considered. Both our ministers and bureaucrats are never held accountable for their wrong decisions or no decisions. Our government will pour more funds in these PSUs as it has done in case of Air India., all in the name of aam adami!

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venkataramanaiah ramu | 31-Jan-2013Reply | Forward

Now a stage has got set-in where it is taken for granted that the 2 PSU's have to survive like the present only as there are no brighter prospects in sight and the loses are almost to be taken for granted, would become a feature of the PSUs. With the govt accepting that the two PSUs survive on funding, it would become a safe heaven for the two PSUs and ultimately become permanent liabilities. hence , in the interest of ensuring that the PSUs should not lay foundation for other PSUs to follow suite,an expert committee be set up under Sri.Petroda or other expert to suggest ways and means for salvaging the PSUs and suitable steps taken.

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KSRao | 31-Jan-2013Reply | Forward

Instead of doling out large sums of money to BSNL/MTNL, hand over the companies to the employees' cooperative charging them rentals for for using the facilities. Thus, the government will get money for nothing, employees will become entrepreneurs, and govt gets rid of a headache.