India’s telecom minister Ravi Shankar Prasad has approved a revival plan for state-owned mobile operators BSNL and MTNL.
The revival plan is subject to the approval of the cabinet, according to media reports. The latest development indicates that BSNL will not be facing privatisation of closure of its mobile operations. But BSNL suppliers will face challenges because of the delay in clearing their payments.
MTNL will be merged with BSNL as part of a revival plan. MTNL has presence in Delhi and Mumbai. BSNL has presence in all other telecom circles excluding Delhi and Mumbai. Both BSNL and MTNL have lost significant market share in India. BSNL has 115.895 million mobile customers on its 2G and 3G networks. MTNL has 34.38 lakh customers in Delhi and Mumbai, two lucrative telecom circles in India.
MTNL, which is listed on Indian stock exchanges, would be converted into a subsidiary of BSNL following the merger. The merger would be conducted after sorting out issues such as human resources. A joint committee will be put in place to oversee the entire process over the next 18 months.
India will bring capital support of Rs 14,155 crore to BSNL to buy 4G spectrum. BSNL will speed up its land monetisation efforts. BSNL will set up a special purpose vehicle (SPV) for the land monetisation initiatives. The action plans also include financial support for BSNL’s rural exchanges.
BSNL will offer a Voluntary Retirement Scheme (VRS) for its employees above 50 years. BSNL will cut the age for retirement to 58. BSNL will offer an ex-gratia to the employees in cash, in single or maximum five instalments for tax benefits.
BSNL aims to issue bonds to general public to mobilise funds for its proposed VRS. These bonds will be guaranteed by the government, with a 50 percent interest liability on bonds to be borne by the Government.
The net worth of BSNL stood at Rs 34,276 crore, while MTNL has a negative net worth of Rs 9,735 crore as on April 1, 2019.
BSNL reported loss of around Rs 14,000 crore on revenue of Rs 19,308 crore during fiscal 2018-19. BSNL’s provisional loss was Rs 4,859 crore in 2015-16, Rs 4,793 crore in 2016-17 and Rs 7,993 crore in 2017-18, according to information presented in Parliament.
BSNL spent 75 percent of the income on salary for its 165,179 employees. Airtel, which has 20,000 workers, spent 2.95 percent of the income towards the employees’ cost. Vodafone, which has with 9,883 employees, spent 5.59 percent of the income on salary.
