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DoT seeks relief for BSNL, MTNL once again, but with fewer demands
Posted on 23rd October 2019
Department of Telecommunications has again sought relief for the beleaguered Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd with fewer demands, essentially translating into lesser cash outgo by the Centre.

It is learnt that DoT has sought funds for the voluntary retirement schemes of the two sick units and allotment of 4G spectrum, besides proposing to raise finances by monetising assets.

The VRS package being considered for BSNL is expected to be around Rs 6,365 crore and an equity infusion of Rs 6,767 crore towards the allotment of 4G spectrum.

“We are hopeful that this proposal would be approved and there is some traction in the revival of BSNL and MTNL,” an official told Business Standard.

The monetization of the assets is expected to be done separately i.e. tower assets and optical fibre assets.

This relief measure has been proposed by the DOT after the Finance Ministry said that the cost of reviving the two sick units is very high and they should be shut down instead. The department feels that the current request is not an expensive proposition and would not dent the Centre’s finances.

“We will do whatever it takes to save the two companies from closing down. If the Finance Ministry agrees with the relief measure, it would be enough to keep the companies stay afloat for the medium term at least,” the official said.

Both BSNL and MTNL had sought relief from the government in the form of conversion of debt into sovereign guarantee, pay revision and subsequent voluntary retirement.

BSNL sought 4G spectrum across India through an equity infusion of Rs 7,000 crore. MTNL suggested converting its Rs 20,000 crore debt into sovereign and surrendering 3G spectrum.

About half of the 176,000 employees at BSNL are estimated to retire in the next five-six years. If only about 50 per cent of eligible employees (those about 50 years) opt for VRS that would be 40,000 people.

For MTNL, the VRS package could have a revenue impact of Rs 2,120 crore. The company has 22,000 employees. Of this, 16,000 employees with retire in the next five-six years.

BSNL's loss is estimated to be around Rs 14,000 crore with a decline in revenue to Rs 19,308 crore during 2018-19. BSNL's losses rose steadily from Rs 4,859 crore in 2015-16, Rs 4,793 crore in 2016-17, Rs 7,993 crore in 2017-18 and is estimated to swell to Rs 14,202 crore in 2018-19.

The firm’s debt stands at Rs 13,000 crore. The debt-laden company has failed to secure bank loans in the past two years. The overall debt of the telecom sector is estimated at over Rs 6 trillion.

Both the companies are yet to pay salaries to their employees for the month of September.

IT & telecom minister Ravi Shankar Prasad, in his first press conference after assuming charge, had said that the government will revive BSNL and MTNL.

Related Companies: Bharat Sanchar Nigam Limited (BSNL)   

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