Govt working on revival package for BSNL, MTNL
27 June 2019
The government on Wednesday said it is working on a comprehensive plan for the revival of Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd and that there was no proposal to close the state-run telecom companies.
"No proposal of closure of Mahanagar Telephone Nigam Limited (MTNL) is under consideration," telecom minister Ravi Shankar Prasad informed the Lok Sabha. He also said there was no such proposal under consideration for BSNL as well.
He said the Indian Institute of Management, Ahmedabad and consultancy firm Deloitte are currently engaged in the preparation of a revival/ restructuring plan for BSNL and MTNL, respectively.
“Pursuant to their recommendations and approval of respective boards, a comprehensive revival plan for BSNL and MTNL is under preparation," Prasad added.
The loss making telecom firms have approached the Department of Telecom for immediate help after the tariff war triggered by the entry of Reliance Jio aggravated their financial stress.
The DoT is likely to announce a revival package for BSNL and MTNL in the next few days as a severe cash crunch has again jeopardised timely payment of salaries for June.
According to sources, cabinet secretary PK Sinha on Tuesday held a meeting with DoT officials, including secretary Aruna Sundararajan, to chart out a revival plan. Top bosses of BSNL and MTNL, however, were not present in the meeting, sources said.
Reports said apart from the proposals submitted by the companies, the government is exploring other options aimed at long-term stability of the telcos. The revival plan may include some harsh measures to cut cost, including a reduction in the number of employees. Employees will also be made accountable.
With a combined workforce of around 2 lakh, the companies even failed to pay February salaries on time.
According to official data with the government, the market share of MTNL in the two circles where it operates has declined to 6.95 per cent at the end of 2018-19 from 7.37 per cent in 2016-17.
BSNL's market share, despite cut-throat competition, increased to 10.72 per cent from 9.63 per cent on pan-India basis during the same period, partly gaining from losses to top private sector telcos – Voda Idea and Bharti Airtel. .
"The telecom sector is facing financial stress due to stiff competition and reduction in tariffs. The gross revenue of two private operators, ie, Airtel and Vodafone/Idea has also reduced in FY 2017-18 and FY 2018-19," Prasad added.
He also said the government is utilising BSNL services for providing mobile connectivity in Naxal-affected areas, improving telecom network in Andaman and Nicobar and Lakshadweep islands, optical fibre based network for defence services and execution of BharatNet project, among others.
The Telecom Regulatory Authority of India (Trai) is also reported to be looking at the proposal of 4G spectrum allotment to these firms without auction. In the wake of the 2012 Supreme Court order on spectrum allocation, the DoT is looking for other alternate mechanism for spectrum allocation to state-run telcos. 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 say allotment of 4G spectrum is key to survival in the hyper-competitive telecom sector.