DoT to send BSNL, MTNL revival proposal to Cabinet this week

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Published: April 9, 2019 3:51:12 AM

The state-run telecom firms have been facing financial crunch with declining revenues and rising costs over the last few years. The situation became worse this year when the firms even failed to pay February salaries on time.

DoT to send BSNL, MTNL revival proposal to Cabinet this week

The Department of Telecommunications (DoT) will send this week a revival proposal for BSNL and MTNL to the Cabinet with two key options – voluntary retirement scheme (VRS) and allocation of 4G spectrum. The urgency on part of DoT came after the Prime Minister’s Office (PMO) asked it to work out a solution instantly in its April 2 meeting. The Cabinet will approach the Election Commission to seek permission to approve the revival proposal as currently model code of conduct is in place.

According to sources, the DoT has listed out three-four options to fund the VRS for around 54,000 employees of BSNL, costing around `6,365 crore and `2,120 crore for over 10,000 staff at MTNL. “We have suggested options including equity infusion, issuance of bonds backed by sovereign guarantee and monetisation of assets to fund the proposed options,” a source in DoT told FE. However, as monetisation of assets and issuance of bonds will take time, equity infusion by the government will be done instantly, the source added.

The state-run telecom firms have been facing financial crunch with declining revenues and rising costs over the last few years. The situation became worse this year when the firms even failed to pay February salaries on time.

There are around 1.76 lakh employees in BSNL and 22,000 in MTNL. Almost 60% of BSNL’s revenues goes into paying salaries while in case of MTNL, over 90% earnings are utilised in staff cost. A huge number of employees is the primary reason for the losses.  An idea about the excess workforce in these firms can be gauged by the fact that BSNL serves only around 650 customers per employee, a sharp contrast from private players where per employee customers are in the range of 17,500 to 27,500. The situation at MTNL is even worse where per employee customers are a meagre 160. It is estimated that 16,000 MTNL employees and 50% of BSNL staff will retire in the next 5-6 years. However, the employees unions in these firms oppose any VRS proposal while stressing that 4G spectrum should be allocated instantly.

The telecom sector has witnessed massive job losses in the last couple of years, primarily because of heightened competition after the entry of Reliance Jio. All the private incumbent operators have reduced the staff count. However, both BSNL and MTNL have remained unaffected but the immense salary burden is turning out to be an Achilles heel for the telcos as they failed to provide February salary on time to staff.

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