MTNL planning to offer VRS worth Rs 1000 crore to 5000 employees

State-run telecom operator Mahanagar Telephone Nigam Ltd (MTNL) is planning to offer voluntary retirement scheme (VRS) worth Rs 1000 crore to its employees in India in order to cut down high staff cost, according to a report by Infracircle.

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The telecom ministry will seek the Cabinet’s approval on the same, the report said, adding that the ministry is further trying to get it passed before the upcoming Union budget so that the funds can be budgeted. The Telecom Commission, the highest policymaking body of the department of telecommunications (DoT), has already given a nod for the VRS in April this year.

“We will soon send a note to the Cabinet for approval of MTNL’s VRS plan. The Telecom Commission recommended it in April this year, but there has been no movement since then. It’s a part of the revival plan for the telecom PSU (public sector unit) and the first stage is Cabinet approval,” senior official from the ministry was quoted as saying.

The report said that around 5,000 employees, 18% of total employee base, are likely to opt for VRS, which would lead to Rs 400-500 crore savings every year for MTNL.

The move will also free up certain resources for making more investments in the network.

“Stagnant revenues and a high employee structure are the biggest problem areas for MTNL. Telecom is a sector which needs constant investment for modernisation. But, on the contrary capital expenditure in MTNL is quite less. There are also assets which need to be monetised,” the official added.

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The state run telco plans to invest 2500 crore over next two-three years to expand and upgrade its network as it has been struggling hard to survive in the highly competitive market.

Also read: Telecom Commission gives nod to VRS for MTNL employees

MTNL, which has operations in Delhi and Mumbai circles, quarter posted a loss of Rs.718.02 crore in June where its total income decreased by 4.5% to Rs.744.72 crore.

Bharat Sanchar Nigam (BSNL) will also slash ts workforce by nearly 7 percent in 2017-18. An article in the Economic Times said that the workforce lay-offs will have to do with employees reaching their retirement age.