MTNL, BSNL won't be shut, revival plan under preparation: Minister Prasad

Both state-run firms are facing major financial stress due to stiff competiton and high employee costs

The government on Wednesday clarified there is no proposal to close state-run BSNL and MTNL, which are facing financial stress due to stiff competition and high employee costs, and added that a comprehensive plan for their revival is under preparation.

"No proposal of closure of Mahanagar Telephone Nigam Limited (MTNL) is under consideration," Telecom Minister Ravi Shankar Prasad informed the Lok Sabha.

In a separate reply, he said there was no such proposal under consideration for BSNL as well.

"Indian Institute of Management, Ahmedabad and M/s Deloitte were engaged to facilitate the preparation of the revival/ restructuring plan of BSNL and MTNL respectively. Pursuant to their recommendations and approval of respective Boards, a comprehensive revival plan for BSNL and MTNL is under preparation," Prasad added.

The loss making telecom firms have approached the Department of Telecom for immediate help as they are facing financial stress, which has aggravated due to the tariff war triggered by the entry of Reliance Jio.

Prasad further said the employee cost of BSNL is 75.06 per cent and that of MTNL is 87.15 per cent of their total income, while the same for private telecom companies varies between 2.9 to 5 per cent.

The government wants to take care of the employees and yet revive these PSUs for fair competition in market, he added.

According to data shared in the Lok Sabha, the market share of MTNL in the two circles where it operates has declined to 6.95 per cent at the end of 2018-19 from 7.37 per cent in 2016-17.

BSNL's market share, despite cut-throat competition, increased to 10.72 per cent from 9.63 per cent on pan-India basis during the same period.

"The telecom sector is facing financial stress due to stiff competition and reduction in tariffs. The gross revenue of two private operators ie Airtel and Vodafone/Idea has also reduced in FY 2017-18 and FY 2018-19," Prasad added.

He also said the government is utilising BSNL for providing mobile connectivity in Naxal-affected areas, improving telecom network in Andaman and Nicobar and Lakshadweep islands, optical fibre based network for defence services and execution of BharatNet project, among others.

The minister said there was a delay of some days in payment of salary in the last five to six months at MTNL due to shortage of funds arising out of mismatch in revenue inflows and liability outflows, but now no salary payment is pending.

"The salary to BSNL employees is being paid regularly. However there was some delay in the salary paid for the month of February, 2019," Prasad said.

According to official data, a total of 1,63,902 employees, including 46,597 executive and 1,17,305 non-executive, were working in BSNL as on March 31, 2019. MTNL's staff strength stood at 21,679 (3,128 executive and 18,551 non-executive employees).