BSNL, MTNL revival: PMO allows 4G airwaves, VRS; Cabinet nod imminent
At a high-level meeting at the PMO late Tuesday, it was also decided that the two telcos will frame a Voluntary Retirement Scheme (VRS) to reduce their employee strength, which will be followed by a reduction in the retirement age to 58. The Prime Minister's Office (PMO) has in-principle agreed to the allocation of fourth-generation or 4G airwaves to Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) in an effort to revive the two cash-strapped public-owned telcos.At a high-level meeting at the PMO late Tuesday, it was also decided that the two telcos will frame a Voluntary Retirement Scheme (VRS) to reduce their employee strength, which will be followed by a reduction in the retirement age to 58.
The PMO-led meeting, however, decided to drop the proposal to merge the two telcos as well as the proposal to create a special purpose vehicle for land monetisation and transfer of BSNL’s loan.
But it agreed to monetisation of land assets and telecom infrastructure, which would be monitored by a joint committee comprising officials of BSNL, DoT and the Department of Investment and Public Asset Management (DIPAM).
The proposals will now be taken to the Union Cabinet for approval, according to a person aware of the matter.
This comes despite the finance ministry reiterating its opposition to the revival package, citing additional financial burden on the state exchequer.
In the meeting at the PMO, which was attended by Department of Telecommunications (DoT) secretary Anshu Prakash and BSNL chairman PK Purwar, it was also agreed that the government will treat the 4G spectrum allocation to the two telcos as 100% capital infusion.
The Narendra Modi-led government is looking at ways to reduce the financial stress on the two state-controlled telcosby allocating next-generation of frequencies to commercially launch high-speed 4G services, the absence of which has hurt their revenue, and monetising land assets, besides an employee retirement scheme.
The Voluntary Retirement Scheme (VRS) would cost Rs 6,365 crore to BSNL, and Rs 2,120 crore to MTNL, while the administrative cost for the allocation of 4G radio waves to BSNL is pegged at Rs 14,000 crore and Rs6,000 crore for MTNL.
BSNL and MTNL have been financially stressed owing mainly to the high revenue-to-wage ratio, with over 163,000 and 25,000 employees respectively. Both the companies have faced huge revenue pressure and have widened their losses amid huge cost pressures in an intensely competitive industry, especially since the entry of Reliance Jio back in late 2016.
In response to the Cabinet memo, the finance ministry had earlier raised certain queries. It had argued that a financial impetus to the two telcos or any upfront payout to BSNL and MTNL could bring in a huge burden on the budgetary resources.
In July, a group of ministers (GoM) headed by home minister Amit Shah had also discussed their revival.
