4 Months after BSNL, MTNL Revival Package Announcement, Silence over 4G, Sovereign Guarantee for Bonds

Kolkata: Four months after Union Telecommunication Minister Ravi Shankar Prasad announced on October 23 last a revival package for Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), only one component of the package—voluntary retirement scheme (VRS)—has been very aggressively acted upon by the Centre and, at its behest, by the two telecom companies.

Independent India’s most sweeping VRS saw in one stroke the exit of over 92,000 employees—over 78,00 from BSNL and the rest from MTNL—after the office hours on January 31.

The VRS-optees had to go without their salary for January and, of course, the VRS-related dues. They had to go without any official indication as to when the amount deducted from their salary on account of provident fund from May 2019 onwards would be deposited in their individual PF accounts.

On that fateful day, they had no knowledge that severe financial strain would force several people doing BSNL work to end their lives. They included one departmental group D category employee in Jabalpur who had not sought VRS. The others were contractors’ men. They had not been paid by the contractors for the past several months. Reason? The contractors had not received their dues from BSNL.

Alongside forcing strict implementation of VRS, the Department of Telecommunication (DoT) also aggressively did a follow-up; ordered BSNL and MTNL to lose no time in abolishing at once all of the 92,000 plus posts exited by the VRS-optees. The post-VRS situation, as it obtains now, was explained to NewsClick by Animesh Mitra, president of BSNL Employees’ Union and Swapan Chakraborty, its deputy general secretary.

In a bid to highlight the difficulties and uncertainties faced by those who had opted for VRS and the 70,000 plus serving employees, the umbrella outfit—All Unions and Associations of BSNL—had organised a day’s hunger strike on February 24.

What are the other components of the Rs 69,000 crore revival package announced with much fanfare by minister Prasad on October 23, 2019? And, what did he declare on that occasion?

The two companies would be “administratively” allocated 4G spectrum. PTI quoted telecom secretary Anshu Prakash as then saying that spectrum would be allocated within a month. The Centre would offer sovereign guarantee to the companies to raise a debt of Rs 15,000 crore by issuing bonds. The amount is to be utilised to recast existing debts and meet other expenses. The Centre would fund VRS and retirement liability estimated to require Rs 17,160 crore and Rs 12, 768 crore respectively.

These are the operative parts of the package warranting action within a reasonable timeline. And what did Prasad declare? “Neither BSNL/MTNL is being closed, nor are they being disinvested, nor are they being hived off to any third party. [...] With all these (measures), I’am confident BSNL will become EBITDA positive in the next two years”.

Also read: 75,000 BSNL Staff Opt For VRS, Unions Blame Management for ‘Fear Psychosis’

The minister’s optimism regarding BSNL being on the road to viability in the next two years has to be viewed against the backdrop of the decision to eventually merge MTNL with BSNL. Until that happens, MTNL will be made a subsidiary of BSNL.

The two companies have been pleading for 4G spectrum for well over two years “to remain competitive in the market”. Its private sector rivals had access to 4G well in time and now they are gearing themselves up to capitalise on 5G. If telecom secretary’s indication had been acted upon, the two PSUs should have been “administratively” allocated 4G latest by the end of November last year.

Mitra and Chakraborty said, “Earlier, we were given to understand that latest by March 2020, that would happen. Then we got indication that by July, action would be taken. Now, we are to understand that allocation may be delayed further to October. The situation is depressing, the silence of the minister and DoT is intriguing”, they added.

What is more, said Chakraborty, certain tenders for jobs in the strategically sensitive Northeast stipulated that the responding parties should be equipped with 4G spectrum. This will automatically rule out BSNL’s participation in the tender, if the authorities stuck to the stipulation. “We have conveyed our concern to the right quarters; but to what effect we do not know”, he added.

There is no move so far to facilitate issue of bonds to raise Rs 15,000 crore with sovereign guarantee. The finance ministry, which has to act in this regard, remains tight-lipped. It appears the government has reached the limit for tendering sovereign guarantees for this financial year. There was a meeting of heads of circles (chief general managers) in New Delhi on February 13-14. It was addressed by the minister and other DoT top brass. Then too, no indication about 4G allocation and sovereign guarantee was given by them.

The revival package envisages monetisation of BSNL and MTNL assets worth Rs 37,500 crore over a period of three years. The authorities have started preliminary work to this end. They have initiated discussions with 8-10 international property consultants (IPC) in the metros. The exercise will be carried out under the watch of the Finance Ministry’s Department of Investment Public Asset Management.

Calcutta Telephones CGM Biswajit Paul recently went on record saying that they had decided to lease out assets in 18 different telephone exchange locations and dispose two land parcels. Regional chief of IPC Knight Frank Swapan Dutta confirmed to NewsClick that they had received a list of premises in various city locations for leasing.

Interestingly, a sizeable space in Telephone Bhavan, headquarters of Calcutta Telephones located in Dalhousie square, is proposed to be leased out. Expressions of interest, when issued, will throw light on the authorities’ plans and, perhaps, expectations, Dutta observed. This drill is being followed in other metros.

Meanwhile, BSNL has finalised its outsourcing policy for maintenance and what it has described as provisioning of landline and broadband for external plant of copper network in urban areas. In the circulated guidelines the company has conceded that the post-VRS reduction in staff has necessitated outsourcing in selected exchanges and clusters in urban areas.

The contract for outsourcing on specified execution and financial terms will be initially for two years with provision for extension for one year. The responsibilities of the company’s own staff in the group C and D cadres in the new situation have been clarified in the policy. Interestingly, it lays emphasis on services to the satisfaction of existing fixed line customers and stepped up capacity utilisation to accommodate new landline and broadband connections.

For record, it may be mentioned that the revival package clarified that servicing of the bonds will be the company’s (BSNL, as MTNL will become its wholly-owned subsidiary) responsibility. The plans formulated by the companies in anticipation of their getting 4G spectrum envisaged roll-out of 60,000 mobile sites across the country by BSNL at an estimated cost Rs 7,200 crore over a period of 12-15 months after allocation of 4G. MTNL’s plan for New Delhi and Mumbai – the two metros which it services – provided for roll-out of 9,750 mobile sites at an estimated cost of Rs 1,100 crore.

Also read: If a Private Player Can Revive a PSU, Why Can’t Govt?