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BSNL won’t be profitable in another 2 yrs, although VRS will save Rs 10,000 cr/yr: MPs’ panel

Parliamentary panel says BSNL will be profitable by 2023-24 only if it fully realises revenue & cash flow from services and monetises its assets.

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New Delhi: The Bharat Sanchar Nigam Limited (BSNL) won’t be profitable for another two years, despite saving nearly Rs 10,000 crore annually with employees opting for voluntary retirement, a parliamentary standing committee has noted in its report. 

“The expenditure of BSNL has reduced from Rs. 34,400 crore per annum to Rs. 24,687 crore per annum (Annualized value of 9 months figures) mainly due to savings in employee benefits expense, due to VRS [Voluntary Retirement Scheme] as part of revival package,” the Parliamentary Standing Committee on Information Technology said in its report tabled in the Lok Sabha and the Rajya Sabha on 10 March.

According to the report, based on presentations from the telecom department, BSNL is now “EBITDA positive” and yet, only “expects to be profitable from FY 2023-24 onwards”.

EBITDA or Earnings Before Interest, Taxes, Depreciation, and Amortization is an accounting metric that is used to measure the overall financial performance of a company.

The report said the government-owned telecommunication company’s revenue has not grown “mainly” because it is currently not a 4G service provider, and because expected “monetization of land assets” has not taken place.

Even the likelihood of reaching profitability by 2023-24 is “subject to full realisation of the revenue and cash flow from services as well as monetization of land assets as envisaged at the stage of processing of the revival package,” it noted.

The report said the committee had asked the telecom department why 4G spectrum had not been allocated to BSNL or its other PSU, MTNL, in 2020-21 itself. In reply, Telecom Secretary Anshu Prakash told the panel that a tender for telecom equipment providers to provide 4G equipment to BSNL had been issued so the company could start 4G services but the department cancelled it later because it wanted to “encourage BSNL as a vehicle for Indian telecom equipment”, according to the report.

Quoting Prakash, the report said: “As on date, there is not a single Indian company which can give them [BSNL/MTNL] the equipment of 4G which can be used for vast networks. So, what BSNL has done is that, on 1st January, they have floated a fresh tender in which there will be a proof of concept which will be a substitute for experience. Leading companies like TCS, Tech Mahindra, Sterlite, and L&T have purchased documents for the proof of concept. BSNL had nearly 1600 queries after the pre-bid meeting, which will be answered shortly.”

The telecom secretary also said spectrum is allotted for a 20-year period and it is “in the interest of BSNL and MTNL” to start once they have the 4G equipment and are more prepared to use the spectrum. Else, the PSUs will be paying for unutilised spectrum, the committee was told.

Prakash added that BSNL and MTNL will now get the spectrum in “June-July”, in fiscal 2021-22.


Also read: Why the ongoing spectrum auction is different from the last round 5 years ago


Asset monetisation 

The standing committee’s report says the land and building assets of BSNL and MTNL identified for monetisation are worth Rs 67,837 crore and Rs 17,985 crore, respectively.

However, the expected revenue from “monetization of land/building assets of BSNL and MTNL for year 2021-22 is Rs. 1200 crore and Rs. 300 crore respectively”, it adds.

Explaining this comparatively low level of monetisation compared to asset value, the telecom secretary is quoted in the report as saying: “During this past one-year period, monetisation was a problem…Land prices have fallen. Rentals have fallen.”

Prakash maintained that the realty market has taken “some kind of beating during this time”, but he also said “we did not test the market” to gauge its appetite.

There were further delays during the Covid-induced lockdown, he told the committee. “The International Property Consultants, unlike Government where we were in office virtually every day… just did not make the site visits because they were working from home. Eventually, we have to actually coax and coerce them, and give them transport so that they could give their reports.”

According to his estimates, there are five properties that are ready to be auctioned. “This year is going to be very critical for us because we hope to monetize more properties,” Prakash was quoted as saying in the report.

The telecom secretary also shared information on the amount of money BSNL earns from its core assets that are fibre and tower.

BSNL has 68,000 towers, of which 13,000 earn over Rs 1,000 crore per annum in rent, on a gross basis. Besides, it earns about Rs 400 crore per annum by allowing others to use its fibre.


Also read: Reliance Jio emerges biggest bidder for telecom spectrum as it buys 73% of airwaves sold


 

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12 COMMENTS

  1. The main shot gun that private sectors has is to hire and fire employees at will. PSU like BSNL has job security to retirement. That absence of job loss risk makes them lazy, incompetent and just another Air India. The entire country suffers from this absence of job loss risk. India will never ever grow unless this obnoxious “Govt.” gift is taken away from all govt. related business. Even the 6% organized sector must weed out incompetence every year to be more efficient. As for the MP’s in Parliament……. enuf said. They will keep BSNL alive.

  2. Hand over this too to Ambani/ Adani. Matter ends. These too seems the only businessmen with acumen if you see wealth addition!!!

  3. There has been enough delay already. All the companies should be asked to show ‘proof of concept’ each in different circles and good enough area to evaluate it and interoperability. Then tender the work with installation & maintenance for 2 years. Hopefully, it will be executed fast and to standard.

  4. Unless work culture change happens in the minds of remaining BSNL staffers, this organisation will be in growing loss only. The mindset of the staff is always unprofessional, unproductive and unfriendly towards customers. Very less consumers are remaining with BSNL. Better to end this organisation at the earliest otherwise exchequer is burdened.

  5. How can expect profit, when the staff sit comfortably, shouting at customers who stand in a very long Q by holding bunch of documents to get one SIM. After all sufferings, NO signal, stand on road to have broken conversation.

  6. The attitude of the employees as same as 10 years back. Unsupportive, rude, lazy, dont care. This company will never see profit, unless they understand the main goal they serve for. The satisfection of the customer. Which is near to zero. I had opted BSNL and within 3 days I have decided to leave it. Shame to this company. It should be immediately turned to private company.

  7. If GOI really give equal support to BSNL n MTNL for a year like Jio, Airtel..trust me ,both companies will be in the list of best fortune companies..
    All are paid by business owners individually..

  8. How pathetic it is?? If BSNL was provided with 4G spectrum and Equipment BSNL would have become financially self reliant and could have come to profits. The replies of Teleco. Dept. clearly proving that they are wantedly delayed the allocation and Equipment. Make in India is best.. but here BSNL has lost the market and faith in their loyal customers.

  9. If the Govt.want to sale it out the BSNL and MTNL to the other private party ,then there is no option…otherwise there is what difficult to restore it in profit by providing properly training to higher staff ,our ITS staff is so strong and minded people if they think to bring the firm in profit they will do that but Govt has to support them ….otherwise what would they do without govt.
    It will big mistake if BSNL and MTNL will washed out

  10. BSNL employees r born negative.one example i have taken a sim card from Bihar and lost due to my fault then for new sim Card for same no is to be taken from Bihar.not from Bokaro Steel City Jharkhand.in case 9f jio they issue duplicate simcard on bas8s of adhar no irrespective of or8ginal issued from any part of india.second is if validity expires on 20 and recharge is done on 10 bsnl activate from 11 but in case of jio they activate after expiry of previous validity date that too auto.

  11. Please give the service promptly. Now a days no body responsible. Just I am sending the message server not responded it’s our problem

  12. BSNL won’t be profitable ever, it’s in their working DNA. Close it down, nobody will even touch it with a barge pole if offered to sell.

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