The Sam Pitroda committee set up by the Prime Minister to revive the fortunes of state-owned BSNL has decided to suggest splitting the post of chairman & managing director into two.
The committee, set up at the performance review meeting of BSNL by Prime Minister Manmohan Singh on January 6, has identified the board?s inability to resist political demands that hurt BSNL?s commercial interests as the key reason for the company?s decline. So the committee wants to bring in more professionalism to the board.
According to sources, by splitting the CMD?s post, an eminent industry person who would not be subservient to political demands can be appointed as the non-executive chairman, who can then scrutinise board proposals with more rigour. ?The managing director then can concentrate fully on running the day-to-day operations of the company and the executive chairman can act as a buffer between him and the political masters,? sources said.
Such a move would also bolster investor confidence in the company, in which the government wants to divest 10% stake later. The move is seen as logical and can be executed without any opposition from employee unions, sources said. Further, the recent instance of industry stalwarts reviving crisis-ridden Satyam in a record time has bolstered hopes amongst the committee members, which also include noted banker Deepak Parekh, that BSNL?s sagging fortunes can be salvaged.
However, the committee is not keen to suggest another option brought before it?that of splitting BSNL into two companies? infrastructure and services. This proposal suggested by DoT to the committee entails demerging the infrastructure assets of the company like towers and optic fibre, which could then be leased to other private operators, while the services part would focus purely on mobile and related services. Though this recommendation makes sense, the committee members view it difficult to implement as it would involve shifting of employees, which could be opposed by the unions.
BSNL was the most profitable telecom service provider about four years back, posting a net profit of around Rs 10,000 crore. However, mismanagement and poor marketing efforts led to the company?s net profit declining 81% to Rs 574.85 crore in 2008-09. With rising wage bills and operational costs, BSNL is projected to post losses of around Rs 500 crore in the current fiscal.
The biggest contributor to BSNL?s declining performance has been its high wage bill of Rs 10,000 crore for its over 3 lakh employees.