Govt proposes Rs 74,000 crore bailout for BSNL, MTNL
Centre is considering a Rs 74,000-crore bailout plan for one of the country’s biggest loss-making PSUs BSNL and MTNL.
The strategy involves offering a profitable exit package to thousands of employees, including an additional 5% compensation to make the VRS (voluntary retirement scheme) attractive and profitable as well.
BSNL is the country’s biggest state-owned loss making unit, while MTNL was third with a loss of Rs 13,804 crore and Rs 3,398 crore respectively.
Only Air India has a higher loss than MTNL. If the package goes through, the two telecom PSUs will overtake Air India as the biggest drain on the national exchequer.
Speaking to TOI, officials familiar with the proposal — for which a draft Cabinet note has been circulated — said 4G spectrum valued at over Rs 20,000 crore will be allotted by the government and the rollout cost of around Rs 13,000 crore will be paid by the PSUs. The government will foot the bill of a little over Rs 40,000 crore towards the VRS package and early-retirement benefits.
Making a case for the bailout, the department of telecom has argued that closing down of two PSUs will cost Rs 1.2 lakh crore, and thus remains unfeasible.
BSNL and MTNL have continued to drop over the last decade or so due to poor management, high staff cost, misdirected and often unwanted government interference, and not upgrading to new technology.
On the other hand, the telecom industry is fast migrating to 4G and even 5G, the two PSUs are yet to move to faster and more efficient technology. Average revenue per user of these state-owned company is at Rs 38 compared to Rs 70 of private companies.
The government feels costs of the companies can be reduced substantially by bringing down the retirement age from 60 to 58 and offering a profitable VRS package.
Centre is also looking at monetising the locked assets of both the companies, including towers, land and optical fibre.