State-run telecom companies BSNL and MTNL are eagerly awaiting a revival package as the threat of another round of salary delay looms. The firms have already stopped capex on expansion and other works.
According to an official, both the companies are working on a day-to-day basis as severe cash crunch has stopped them from taking long-term decisions.
“They are not even sure if salaries can be paid and are taking every day as it comes. BSNL earns around Rs 1,400-1,500-crore revenue per month but the salary burden alone is Rs 850 crore. Apart from that, paying the bills for electricity and running the network costs over Rs 800 crore, which leaves a deficit of around Rs 200 crore a month,” said a person aware of the situation at BSNL.
In the case of MTNL, the revenues are to the tune of Rs 190 crore per month but expenditure on basic functions and the salary outgo is about Rs 275 crore.
BSNL has applied for a loan of Rs 2,500 crore while MTNL is seeking a Rs 500 crore. If the loans are approved, it will give some flexibility to the companies for a few months after which a revival plan will also be finalised.
Currently, over 60% of BSNL’s revenues goes towards salaries whereas for MTNL, over 90% revenues are used to pay the staff. There have been regular interactions between the top management and the Department of Telecommunications (DoT) in order to finalise a revival plan.
MTNL chairman and managing director PK Purwar has been given additional charge of BSNL for three months after the retirement of the BSNL CMD last month.
As per DoT officials, the 4G spectrum worth Rs 14,000 crore is likely to be allocated to BSNL.
The company has sought 5 MHz in 2100 MHz band pan-India for rolling out 4G services.
The firm also expects around 40,000-50,000 people would opt for the voluntary retirement scheme (VRS), which can cost the firm anywhere between Rs 6,000 crore and Rs 10,000 crore. However, all the expenses are to be borne by the firm and no liability will fall on the government. BSNL expects to take loans to meet the VRS cost.
The Prime Minister’s Office (PMO) is also tracking the situation of the two telcos. Besides the proposals submitted by the companies, the government is exploring other options which could give the telcos long-term stability. The revival plan may include some harsh measures related to cost-cutting — primarily on the salary front. Accountability will be fixed for every employee, who have to either perform or perish.
Both the firms have been facing severe financial crisis amid hyper-competition in the sector. The companies even failed to pay February salaries to their around two-lakh-strong combined workforce on time.―Financial Express