BSNL and MTNL turn EBITDA positive within 1 year of implementing revival plan

21 Jan 2021


State-owned telecom firms Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) are back on the path of profitability a year after undertaking a revival plan to contain huge wage bills, administrative costs and other expenditure. 

BSNL had reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of Rs3,855 crore in 2015-16 against Rs672 crore in 2014-15 and now, after few troubled years and a revival package, BSNL is once again back on the track of profitability. 
Within a year of implementing the revival plan, BSNL and MTNL have turned EBITDA positive in the first 6 months of this financial year. While for BSNL, EBITDA rose from minus Rs3,596 crore for half year ended September 2019 to Rs602 crore in April-September 2020-21, for MTNL the corresponding figures were minus Rs549 crore in April-September 2019-20, and Rs276 crore in the April-September 2020-21 period.
According to Department of Telecommunications (DoT) sources, both organisations are expected to reduce their losses by 50 per cent when compared to 2019-20.
Telecom minister Ravi Shankar Prasad had told the Lok Sabha during question hour in November 2019 that the government was committed to revive BSNL for public service and fairness, and had granted a package to support the PSU. "We are going to revive BSNL and make it profitable," he had told both houses of Parliament then.
Both BSNL and MTNL have seen a sharp reduction in wage bill due to a voluntary retirement scheme (VRS) (nearly 50 per cent employees of BSNL and 75 per cent  of MTNL opted for the VRS package.   BSNL was able to maintain its revenue and cut down on other costs.  
BSNL is also rapidly expanding its fiber-to-the home (FTTH) connections and the progress is being closely monitored by DoT. In the mobile segment, market share has increased to 10.36 per cent in October  2020 as per figures published by Trai.  BSNL added over 10 million new customers during the financial year in mobile segment. This has also given fillip to government’s Digital India drive of cashless transactions as online transactions have increased by over 43 per cent in December 2020 since last financial year.
The union cabinet had approved the revival package for BSNL/ MTNL in October 2019 which, inter-alia, included VRS, support for 4G spectrum, monetisation of core and non-core assets, Sovereign guarantee for bonds to be raised by the PSUs and merger of MTNL and BSNL in the short run.
BSNL and MTNL have very successfully raised money through the bond route. In the recent bond-offer of MTNL, the issue was subscribed more than 3 times and for BSNL more than 2 times.  According to DoT sources MTNL/ BSNL have been able to monetise core and non-core assets totalling Rs1,830 crore in 2019-20.  This figure is expected to be in excess of Rs3,000 crore in the current year.  
In this regard, 6 properties are expected to be approved for auction through DIPAM route. 
BSNL is monetising its tower assets by leasing it out. It earned Rs1,018 crore. in the previous year and has planned to securitise the earnings from tower rentals. BSNL towers have unique preposition of fiber connection in more than 70 per cent, which make them highly attractive for TSP. Fiber has been monetised by leasing it out to private TSPs and BBNL. It has leased out 2 lakh kilometres of OFC at the rate of Rs18,000 per km per year earning a revenue of Rs360 crore.
Insofar as 4G services are concerned, as per DoT the position is quite clear that core network for 4G will be totally made in India.  According to DoT sources, BSNL and MTNL are strategic assets, and will provide a big impetus to the Indian manufacturers in the field of telecom. 
The Indian mobile communication market now has 4 players of which 3 are in the private sector and the fourth is the BSNL/MTNL combine.  In the wireline or land line segment, BSNL/MTNL still has about 50 per cent of the share with considerable network across the country.  The PSUs are hopeful of leveraging this strength by offering the services on fiber and linking this with FTTH connections. 

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more