BSNL, MTNL asset sale proceeds to clear debt, fund VRS

The proceeds of monetisation of assets of the state-run telecom majors BSNL and MTNL will be used to service the debt of these public sector undertakings, (PSUs) and fund a vountary retirement scheme (VRS), as per a decision of the government. This was decided at last week`s meeting of the Prime Minister`s Office (PMO) and the Department of Telecom (DoT) chaired by the PMO Principal Secretary Nripendra Mishra on the matter of revival of these PSUs. "DoT to pursue and lead the phased monetisation of assets of BSNL and MTNL. DIPAM will actively facilitate the entire process and the monetisation plan should be finalised by the Niti Aayog CEO", according to the minutes of that meeting.

"The proceeds of monetisation should inter alia be utlised for funding the VRS and servicing the debt of the two PSUs", it further said. BSNL and MTNL have debts of Rs 15,000 crore and Rs 20,000 crore, respectively. DoT was suggested to closely monitor the performance parametres of both BSNL and MTNL. It was felt that the efficiency parametres have neither been effectively evolved, or are nor being monitored. Serious efforts on revamping the PSUs were lacking, the note said.

It recommended that the administrative allocation of 4G spectrum at discovered price be considered by DoT to faciliatte these two companies to effectively compete in the market and offer them a level playing field vis-a-vis private sector competitors. This will be funded through equity infusion in BSNL and MTNL, equivalent to the cost of the spectrum, it said. The government has also decided that BSNL and MTNL should go ahead with the VRS option.  The contours of the VRS are to be attractively designed for the employees and the funding of VRS is to be done through bonds raised by BSNL and MTNL for which sovereign guarantee with waiver-off guarantee fee will be given by the DoT.

Both PSUs are currently struggling in a hugely competitive market and DoT and PMO have been in discussion to ensure their survival through financial support, including for salary and working capitals requirements. BSNL has a subscriber base of 11. 5 crore and had been in losses for the last 13 years with its last announced financial statement of 2017-18 showing a Rs 7,992-crore loss, while the audited loss is expected to be higher in 2018-19. 

MTNL`s networth has also eroded, as per its auditors.

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Currently, both BSNL and MTNL lack a 4G service and have 1.76 lakh and 23,000 workforce, respectively. The revenues go mainly towards paying salaries.