Amid crisis at both state-run telecom operators BSNL and MTNL, the Prime Minister’s Office has stressed that the companies need to be revived and has asked Department of Telecommunications (DoT) to work out a solution.

Nripendra Misra, principal secretary to Prime Minister, met the top bosses of both the firms along with telecom secretary Aruna Sundararajan on Tuesday to discuss the matter. The PMO has given a green signal, primarily to three-four proposals, which include allocation of 4G spectrum in lieu of equity, reduction of staff costs by way of voluntary retirement and monetization of land assets to reduce debt.

As per sources, the DoT has been asked to work out the proposals in a time-bound manner. “The PMO is very clear that both BSNL and MTNL should survive and the government will do its bit to let the firms do that,” a source said.

Both the firms have been facing severe financial crunch amid hyper competition in the sector. The companies even failed to pay February salary on time to their around 2-lakh-strong combined workforce.

It must be mentioned that Telecom Regulatory Authority of India (Trai) is already looking at the proposal of 4G spectrum allotment without auction to these firms. The DoT had reached out to Trai as it was not sure if spectrum can be allocated by any other mechanism to the state-run firms in the aftermath of 2012 Supreme Court order. The companies have offered to give half the amount of 4G spectrum upfront by way of issuing preferential equity to the government and rest of the amount in instalments.
BSNL and MTNL cite allotment of 4G spectrum as the prerequisite to survive in the hyper competition, led by the entry of Reliance Jio. All the remaining private operators in the sector are spending huge amounts of capital to strengthen 4G infrastructure.

Another important decision around the revival is to reduce the staff cost. Currently, over 60% of BSNL’s revenues go into paying salaries whereas for MTNL, over 90% revenues are consumed in paying staff. As a majority of the employees are over 50 in the firms, the voluntary retirement scheme will be beneficial in reducing the staff cost. Sources said it may be made mandatory to everybody over 50 if the desired number of employees does not come forward to take it.

Regarding the land monetisation, the government is considering leasing out of properties as most of the land assets are not owned by the companies.