With state-owned Mahanagar Telecom Nigam (MTNL) going through a financial crisis, the government has started the process to transfer over 3,000 employees to Bharat Sanchar Nigam (BSNL) and the department of telecommunications (DoT). Separately, the government is also considering giving the option of voluntary retirement scheme (VRS) to the employees, officials in the know said.
This is being done to cut costs and resolve salary payment issues to employees amid a lack of funds. For MTNL, employee costs, which include salaries and other benefits, accounts for 78% of its yearly (FY24) operating revenue of Rs 728.5 crore. Besides, the loss-making company has a finance cost of Rs 2,690 crore, way above the revenues it earned in the last financial year ended March.
Sources said general managers in MTNL have been asked to submit the names of 50% officers for deemed deputation to BSNL.
Further, DoT has sent a proposal containing both VRS and deputation to BSNL as options for the employees of MTNL, to the finance ministry. The same will likely be presented to the Cabinet for approval with the additional revival package for meeting MTNL’s debt obligations.
MTNL has defaulted on payments to multiple banks owing to lack of funds. The government has stepped in to pay interest on bonds issued by the firm having sovereign guarantee. The company has total borrowings of Rs 7,873.52 crore from banks and financial institutions, and its total debt stands at Rs 31,944.51 crore.
The government is also considering transfer of MTNL’s operations to BSNL, for which a service agreement is in the works. As part of the agreement, BSNL will be given the authority to manage MTNL, without the need of merging the entities. Officials said BSNL will come on board as a management agency for MTNL, and this is being done to avoid the complexities of a merger, which was earlier being looked at as one of the options.
Amid the restructuring exercise, employees of MTNL have expressed concerns to the company’s management as well as the government that officials on deemed deputation to BSNL should not be posted outside the MTNL service areas of Delhi and Mumbai without their consent. These officers were appointed or opted for MTNL during their absorption based on these service areas, and any deviation from this may lead to significant unrest among the officers.
Further, the employees have demanded that they should be considered for promotions on par with BSNL employees to prevent any hierarchical issues and ensure a level playing field, people in the know said.
MTNL provides services across Delhi and Mumbai, and BSNL in the remaining circles pan-India. MTNL has about 1.9 million wireless subscribers with a market share of 0.2% as of July-end, according to the data by the Telecom Regulatory Authority of India (Trai).
In the April-June quarter, MTNL’s net loss narrowed to Rs 773.5 crore from Rs 783 crore in the previous quarter. The company’s revenue from operations fell 12% sequentially and 8% y-o-y to Rs 183.9 crore in the quarter. The government has so far allocated a total of Rs 3.2 lakh crore as part of three revival packages for BSNL and MTNL
