Road ahead for crisis hit telecom operators BSNL and MTNL

Chennai: State-owned crisis-hit telecom operators BSNL and MTNL in a bid to turn around their loss-making spree may be looking to leverage their assets to private players to generate income and offer VRS packages for employees to bring down salary bills.

Ten years ago, when India was embracing 3G, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) were at the forefront. Today, forced to the brink by cut-throat competition from private telecom regulators like Reliance Jio, Airtel and Vodafone, the two state-owned operators were struggling to pay even salaries and defaulted for the first time in many years.

Both have been making losses continuously since 2009-10 and amidst the fierce competition and rock-bottom tariffs, salaries have become a heavy burden for the two companies. In the December quarter, MTNL’s salary cost at Rs 577.2 crore exceeded its revenue of Rs 514.5 crore. NITI Aayog, the federal think tank, has suggested shutting down the company.

Yet, there is hope for both, if DoT (Department of Telecommunications) gets its act together. The two companies have assets that are hugely lucrative for private operators. BSNL, as of March 2018, owns land worth Rs 70,000 crore and buildings worth Rs 3,760 crore.

A top official from the company said, ‘They could look at becoming an ‘operator of operators’ instead of being a consumer-facing company by leveraging their envious portfolio of assets such as fiber, towers, real estate etc. Since BSNL and MTNL are state-owned, they have the right of way compared to private operators in terms of getting approvals. This gives them a huge advantage which they could use to revamp the companies with a different business model.’

DoT is also studying a revival plan prepared by IIM Ahmedabad by offering a voluntary retirement scheme (VRS) for employees to cut down on salary.

A report from online news portal, Mint, said that the plan suggests a voluntary retirement scheme (VRS) for employees and BSNL’s land monetization. DoT plans to fund VRS packages for BSNL at Rs 6,365 crore and for MTNL at Rs 2,120 crore through bonds. BSNL has 176,000 employees, while MTNL has 22,000.

BSNL will also approach National Company Law Tribunal this week to recover dues of about Rs 700 crore from Reliance Communications, according to official sources. Earlier, debt-ridden RCom in its plea before the NCLAT said that it wants to voluntarily go back into the insolvency process, as it will help to sell its assets in a time-bound manner.

“BSNL has already invoked bank guarantee of around Rs 100 crore submitted by RCom for default on payments. The decision was taken on 4 January by BSNL Chairman and Managing Director Anupam Shrivastava to start legal proceedings against RCom for recovery of dues of around Rs 700 crore,” sources said.