BSNL Says No Proposal for Closure is in Consideration, DoT is Drafting Revival Package

BSNL had earlier noted in its meeting with Telecom Secy that it is considering various options for the company like disinvestment, closure or revival

By February 15th, 2019 AT 7:05 AM
Highlights
  • BSNL Says that a proposal is in works for the revival of the PSU
  • Lowering of retirement age is likely a solution for BSNL's losses

Bharat Sanchar Nigam Limited (BSNL) has issued a formal statement saying that contrary to the ideas of closure which are being extensively talked about, there has been no severe emphasis on the idea of a closure of the company unlike the people would have it believe. BSNL said that the situation is quite the opposite as DoT would like to see a more strengthened and robust BSNL. The government led telecom operator also emphasised the fact that there are some areas where the company is better than the private telecom operators and these are the PSU’s strength in the market. BSNL said that one of these areas is the extensive remote and rural connectivity.

DoT Looking to See a More Strengthened and Robust BSNL

BSNL in its press release also clarified that currently there is no such proposal under consideration regarding BSNL’s closure. The PSU said, “On the contrary, Department of Telecommunications, Government of India (DoT) recognises and values the inherent strengths of BSNL as a telecom services provider with huge infrastructure and reach, especially in rural areas.”

The government led telecom operator further added that the Department of Telecommunications (DoT) is in the process of finalising a proposal for the revival of BSNL. The state-led telecom operator also said that after the proposal is finalised, it will then be considered by the Digital Communications Commission (DCC) very soon. BSNL further clarified its stance on the options which the Telecom Secretary has asked the telco to explore. It said, “It is clarified and reiterated that DoT would like to see a robust BSNL, duly strengthened and financially viable, dedicated to servicing the nation and playing an important role in the telecom sector.”

BSNL is On a Consant Streak of Losses

It is worth noting that BSNL has been seeing a constant streak of losses and the entry of the Mukesh Ambani led telecom operator, Reliance Jio has worsened the conditions for the state-owned telco. In the year 2015-16 and 2016-17, BSNL’s losses stood at Rs 4,859 crore and Rs 4,786 crore respectively. Whereas, in the 2017-18 FY, BSNL’s losses widened to Rs 7,992 crore. One way out of the mounting losses for BSNL seems to be through a gradual erosion of its aged workforce. BSNL has already discussed options of VRS (Voluntary Retirement Scheme) and the lowering of retirement age with the Telecom Secretary. A rough calculation considering an assumption that 50% of the employees between the age 58 and 60 opt for VRS, translates to a saving of Rs 3000 crore for the state-led telco in wage bills.

In hindsight, the Telecom Secretary had also urged BSNL to present a detailed financial analysis of all the future paths which BSNL could opt. Out of these pathways, the closure was one of the options discussed in the meetings and not necessarily the most likely one. In the same session, liquidation of large BSNL-owned land banks, buildings and real estate were also considered for the sake of generating cash influx.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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