Thursday, 18 August, 2022
HomeOpinionStarting with BSNL & MTNL, India’s new govt must bring bankruptcy process...

Starting with BSNL & MTNL, India’s new govt must bring bankruptcy process to public sector

The telecom companies are unable to pay salaries, and a turnaround seems impossible. A bail-out for employees would be cheaper than what the govt pumps in.

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One of the major reform initiatives of the outgoing government is the introduction of an effective bankruptcy process that — so far — has taken place in only the private sector. Why not subject government-owned companies to the transparency and clear-cut decision-making of the same or a similar bankruptcy process? Handing over the matter to a judicial body like a tribunal, with all parties getting a fair hearing, can remove the political sting involved in such sensitive decisions — and also enforce some rationality. Once we are past this electoral season, during which all promises are presented as free lunches, could we bring such non-populist issues into focus? Like fixing the problems of the public sector? “Fix” as in: Let the good ones be, salvage the troubled ones with an approved programme that has finite budget limits, sell those that can’t be salvaged, and shut down the rest.

A picture of TN Ninan, chairman of Business Standard Private LimitedAmong the prime candidates to be looked at is Bharat Sanchar Nigam Ltd (BSNL), which says its mission is to be the leading telecom service provider and the most admired telecom brand. Yet, it has been losing revenue, market share, money and relevance. In five of the last seven years, it has lost Rs 7,000 crore or more, and will do so again this year. Its twin, Mahanagar Telephone Nigam Ltd (MTNL), operates in the most attractive markets of Delhi and Mumbai, but has costs that are twice revenue, and lost nearly Rs 3,000 crore last year. BSNL last earned a profit 10 years ago, its revenue today is much less than it was then, and both companies are now unable to pay salaries. BSNL’s share of the telecom market is down to 10 per cent.

Consider the issue step by step. Can these companies be salvaged? In the bitterly competitive telecom market, a turnaround seems impossible. The next option is to sell both companies. But, like Air India, they might find no buyers. The only non-economic reason for not moving on to the final option (shutting down, like many private telecom players already have) is the very human one that BSNL has about 180,000 employees, and MTNL another 25,000. But a bail-out for the employees would be cheaper than repeated bail-outs of the companies, and could take the form of a lump sum plus an annuity. The bill, even if steep, would be a bargain, considering what the government pumps into these companies. BSNL got Rs 7,500 crore two years ago. The latest proposal is for another Rs 14,000 crore (which the NITI Aayog sensibly opposes).

Also read: Foreign players are taking the place of Indian entrepreneurs biting the dust

Bear in mind that the two companies have spectrum valued at several thousand crore rupees. In addition, BSNL is sitting on freehold land that was re-valued a couple of years ago at Rs 70,000 crore. That is the value that can be unlocked if the employees are taken care of. Subjecting these companies to something like the bankruptcy process for the private sector would force the government to explain why it continues to pour money into these bottomless pits, in preference to the other options that it should logically consider.

No political party can address such issues at election time, and it is unrealistic to expect such hara-kiri (though the witless Rahul Gandhi seems to be committing it anyway). But is there any time at all when the elected government can deal with those issues that can’t be packaged as free lunches? So far, Narendra Modi has carefully ducked all issues that involve trade-offs which may hit voters. Hence the patchy reform record on labour, trade, agriculture and other issues, which (you could argue) has resulted in the lack of economic momentum outside of manufactured statistics. Take the nationalised banks that have got sums approaching Rs 2 lakh crore as fresh capital from the government, but have seen much of that disappear in the market valuation metrics. We have seen “Recognition” of these banks’ problems, and we have got “Recapitalisation” (with more to come, doubtless), but what about the forgotten “R”: Reform? And reform of government-owned entities in their totality? Forget value creation, can we at least stop large-scale value destruction?

Also read: Everyone is growing but no one is making money in India’s champion sectors

By Special Arrangement with Business Standard

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  1. BSNL is being bled on purpose. All policies are in favour of private sector operators. BSNL infrastructures are being used by jio, airtel etc. With the least charges. Govt has become useless. Hence all employees prefer VRS rather than being humiliated at hands of failed policies of govt.

  2. Please do not write any article or even comment on that till you do not get your facts check. Get some knowledge on current scenario of the telecom sector in India with the lowest tariff in the world and then dare to ask who is responsible for what? And also what should the govt do? BSNL can get bankrupted only after all the other existing operators those bearing a loan from the bank’s amounting to 5 lac crs. Being
    a PSU doesn’t mean running on tax payers money. If somebody is really worried about the wastage of his/her tax payments towards the govt he/she should raise questions to the govt for providing loan of 5 lac crs from banks to the private telecoms . This golden period of lowest tariff in the world that customers have enjoyed since entry of JIO is soon going to be over in the coming days if the banks start to recover that loan from the telecom operators including JIO, the highest loan bearer among all. Get ready to pay high🤗

  3. No work in Bsnl. so much employee sitting idle.,,it should be closed, only competant people should be kept. how long tax money can be wasted. but no govr can do anything . join bsnl enjoy till retiremnt, any way govt will fund

  4. Dear author
    Before writing any thing you must have in depth knowledge and should do sufficient home work. S L was formed also under political pressure. If you remember it was formed during BJP GOVERNMENT in 2000. Just after declaring Bajpayee saheb wen t to America to adress congress. No rules were formed all the govt rules were applicable, all statutory audit in addition to some new statutory audit started. Infact BSNL never fun functioned as a corporate PSU. BS NL paid sales tax, service tax even spectrum charges. The. Cash revenue was taken back by DOT in the name of spectrum charges. On the level field all the policy was formed by TRAI in favour of private operator. Stage was formed by BSNL and Late Pramod Mahajan declared launching of reliance services a d BSNL was asked to concentrate on land line s only. It’s BSNL who gives its services e in economically non viable sectors also like far distant area of NE and Andaman and Nicobar Islands.
    Reliance Jio is having loan of 200000 cross bank loan i.e money infused in the bank after demonstration. Air Tel and Vodacom phone and idea in the tune of 100000 crore. Just consider their asset what they have. While BSNL having lone of in the tune of 11000 crore a d giving lively hold of directly and indirectly 100000 family at the the time unemployment is 45 year high. All the DOT employee of TERM CELL and CCA are staying in BSNL Staff qtr and not paying their HRA to BSNL. NOT paying any rent and occupying BSNL premises.
    What ever is happening it is a well thought govt plan to help private operator and close state own PSU. AND privileged information will be adjusted just as petroleum products. What about HAL, ONGC BEL like many other PSU running short of cash. This is govt failure rather then BSNL. Govt failed to start all the ITS Officers absorbed in BSNL after its formation. Govt is not ho outing the commitment which was made during formation of BSNL. Do you have e any idea BS NL is forced to pay the pension contribution of its staff to govt at higest limit of the scale not on the actual scale, in this way BSNL kept on losing since it’s inception. It’s my submission sir do not write on behalf of private capitalist as a sponsored author.

  5. To run an organization that too of a Govt organization is in the hands of Government. Telecom sector was in the hands of Central Govt. In 1990s. With the advent of shift from control regime to decontrol region i.e in the hands of capitalist society, Govt began loosening their hands to private players. Like that process telecom sector was also deregulated in mid 90s. That time telephone service was in DOT. All of a sudden, BSNL was formed, with promise of extending -even during crisis time- financial viability, due compensation in providing services in rural areas, to provide telecom services. Since 1995 private players were allowed mobile serviceswith pricing by themselves. BSNL was allowed Mobiles only from 2002 onwards. Until then incoming and outgoing calls were charged heavily by operators. With entry of BSNL incoming calls were made free; Within two years BSNL started increasing its customer base. Tenders for 9 crores lines were floated for sustenance of customer base and increase of revenue; but thinking of Govt appeared negative. For the thrive of the private players, tender floated by BSNL was stalled by the Govt. Even then Bsnl managed to earn profit morevthan Rs.10,000 Crores; but subsequent onslaught of denial for even purchase of equipments, profit became dwindling resulting into loss from 2008. With all frontal attacks, BSNL was struggling to manage the show. With the present Govt. tacit patronage to JIO in particular, with 4 G and now JIO fast moving 5G with support of the present ruler, BSNL was allowed further much suffering to a shameful miserable position, which lead to delayed salary payment for the Month of Feb 2019 for the first time in the history of BSNL. This is the only organization giving tough competition to its level best to JIO, which is openly admitted by its Chairman, Mukesh Ambani. Even parent organization, DOT, has washed its hands, putting all its efforts of implementation of Third Pay Revision as well as timely support for the right trajectory of growth of its child, the BSNL, absolving its own commitment assured at the time of the formation of BSNL on 01.10.2000. For the pensionary benefits to the BSNL absorbed DOT recruited employees, DOT plucked excess of pensionary contributions from its own employees at the maximum of the scale of pay instead of actual pay drawn. Even then, its hungry did not shrink. Still Indian Telecom Service Engineers are on deputation in BSNL drawing salary from BSNL account without absorption. If they had been absorbed along with others in 2000 or in 2995, they would not have allowed BSNL to the present day situation. They are also one among the culprit. What else to add, with heavy heart.

  6. If these companies will not be in market you all have to pay higher cost in comparison now, as in starting days and these can be improved if political leadership care

  7. Dear first you have to get knowledge about these companies, earlier these companies are in profit but one or the other reason no body care, also noted if these companies shut down as u r intrested than u people have to bear very high rate to make call, as in earlier RS 36 AND also paying for incoming calls , tariffs reduced only after coming these companies in open market otherwise u r mot able to have number of mobile in your pockets think before published.

  8. You are ill informed and paid DALAL to spread false propaganda against PSUs. Since last 4 years what is the haealth of other private telecom companies apart from JIO. Why they loosing market share and revenue. Vodafone CEO said every decision taken in last 4 years to benefit JIO. BSNL is om company still adding subsribers every month apart from JIO. Revenue is at low due to un-sustainable pricing by JIO to kill competition.

  9. Not a single rupee till date give to BSNL by any govt. Even they taken more then 50000 crores rupee from BSNL in diffrent manners. And bsnl not in the position to take single decision without permission of fraud DOT officer. They take all decision for looting BSNL not for development of BSNL. All free services given by BSNL. All Members of Parliament have BSNL landline connection without paying any rent. In all village in remote area and other place BSNL provide telecom services with losses. In any natural calamity BSNL provided services not PVT company. BSNL loans is only 15000 crore and all pvt company loan is more then 5 lakh crores. If any day any private company shuts his company due to heavy loss who bears his debt. BSNL giving employment directly 176000 and more then 3 lakh jobs indirectly. Which private company giving huee employment. I think this person taken money from PRIVATE OPERATER for defame BSNL. Because BSNL give tough competition to other telecom operator without help of government. Next time before write any false article think hundred time..

  10. The author has neither an idea of debt-equity ratio of telecom industry nor he has gone through the objectives of formation of BSNL and other PSUs. It seems that he is paid for writing against BSNL/MTNL/Air India/PSUs.
    He has mentioned about 13000 crores which is only a thought by DOT before elections. He has forgotten to post Rs. 271 crores loss of JIO in Q2 and missed to mention huge debt of JIO around Rs. 1.13 lakh crores(compared to meagre 13000 crores of BSNL) in the industry. By extending free services(violating TRAIs guidelines) JIO has gifted huge loss to the exchequer.
    Without knowing about the remarkable services provided by BSNL from the inception till date, the author has commented on its profitability and survival. It shows his immaturity as a writer. He must be an alien from a capitalistic economy.
    BSNL is a tree which may not be fruitful now but its roots are strong and has still capability of giving shade and fruits. If you will try to burn its leaves, the economy will swallow you.

  11. 1. Author has made right observations regarding two public sector telecom companies, Bharat Sanchar Nigam Ltd (BSNL) & Mahanagar Telephone Nigam Ltd (MTNL). These two companies have rapidly lost market share and they are no longer in a position to earn a profit. As it happens in case of other public sector undertakings, burden of excess staff, increased salary unrelated to productivity and burden of ever-rising pensions–these are factors which have multiplied problems of BSNL & MTNL. Both of them are in sort of a financial crisis as their main business (wired landline phones) is under a serious ‘existential’ threat. Thousands of BSNL & MTNL customers have surrendered and still are surrendering their landline phones. 2. Hence the Union Telecom ministry cannot delay a decision regarding these two companies. 3. It is a historical fact that when telecom services business was opened to private sector, both BSNL & MTNL were simply not prepared to face competition from private sector telecomm companies. It is also a fact that these two companies did not get support from the concerned ministry. The then Communications minister in Union cabinet favoured private companies who grew at cost of both BSNL & MTNL. Hence question that remains to be answered is this: would Voluntary Retirement Scheme be good enough to turn around BSNL & MTNL? Answer is in the negative but our politicians have rarely shown political will and administrative courage to deal with losses of public sector undertakings and we cannot expect much from them. Air India, BSNL & MTNL will continue to exist at cost of taxpayers’ money.

    • Dear U have no idea but you people enjoying low cost on the cost of these company only think twice before blamed these companies.

  12. Author has lack of knowledge and information. In other words working as an agent of Private parties who whishes to eat PSUs

  13. One best thing the GoI can very well do is give full autonomy to BSNL Board like Indian Railways to do real business in the worst cut throat competition Indian Telecom market. If not possible, shut down the business and repatriate employees to DOT/BBNL/NOFN/DIGITAL INDIA GOVT PROJECTS/OTHER GOVT Departments etc.
    Otherwise, implement VRS as advised by. IIM Ahmedabad team immediately and revamp BSNL as also advised by IIM Ahmedabad.
    Because, under the Government clutches BSNL cannot effectively function. This is 100% true. Go ahead without a y more delay.

  14. Kisi k bare m kuch likhne SE pehle pata to Kar liya karo ki Jo like rahe ho vo sahi b h ya ni..
    BSNL profit SE loss m kaise Gaya..iske bare m pata karo..agar aj BSNL band ho Jaye na sabse jyada pareshan tum log hi honge..agar aj company Airtel Vodafone jio per month 200minimum recharge Kya Kar loge tum..inki company h Jo Marzi vo Kare use Karna h to Kare..BSNL market p control rakhti h.. understand things.. before writing anything .focus on problem why BSNL in loss..write about these things and make pressure on gov to do right thing on time last, take decision on time.. kiss paise to ni diye kuch b likhne k liye jisse unhe fayda ho

  15. See before you write such article please make your knowledge updated, what is the use of government if there is no public work or say psu or govt dept, services can never be profitable but business can be profitable. Govt can not do business with his own countrymen. Every thing can not be judged with profit eying. If only profit is criteria dont choose govt rather top business man must be directly appointed as prim minister and president

  16. Ur analysis is not matured at this level. Don’t Praise the JIO. It’s politically created by our rulers with help of ambani brothers. There is a huge loss to Government by auctioning the spectrum with out much competition .They said only for internet during process of auction ,but later on government allowed for telephone call to help jio during auction. So no much competition was there during auction. The above matter should be taken up with legal action and should be banned jio which is aalso a Chinese company.

  17. First of all new govt. should carry out forensic audits of all the loans which public sector banks have given to few favoured richest individual and have turned NPA or jetly and Modi have written them off.
    All these paid articles will talk about inefficient PSUs. Have they seen any of the Indian private Marwari or Gujrati or even parsi owned private companies. They are worse than PSUs. They can not survive for even one day without govt. giving then loans after loans, free licenses, selling PSUs at peanut costs to them. All private Telecom companies utilise BSNL infra, they have only destroyed it. BSNL manpower, infra have been poached by them with active connivance of Modi govt.
    HAL, the strategic PSU, which not only makes planes but also does maintenance of all IAF plane has been reduced nothing to favor some chuts parasites called industrial ists. I am sick of these so called Indian Industrial is whose only business model is to loot Indian public money . Who has looted Indian PSU banks, Modi/ politicians and his cronies/ friends. Now, you see with fight with Pakistan our planes are falling from the skies on their own. All ISRO satellites are launched by HAL manufactured Rockets.
    TIFR, Bose institute, and all R&D institutions have been reduced to rubble by Modi. Medical education has been screwed by him. Earlier, even private colleges you could get seats with govt. Quota now it is impossible. Modi wants all to remain illiterate like him. Health sector has been killed and fraud of insurance has been initiated only to profit his cronies. Where is the infrastructure to support health care. How a villager will come to metro City for getting treated.
    If govt bans PSUs not to give loans to NBFCs and Pvt entities who have already taken more than 50 cr. All these private bastards will run away to UK.or US to enjoy their retirement.

  18. Govt. Never helps BSNL 7000cr rather uses BSNL as a testing platform.
    Starting from GPRS , the then govt priorities RCom and puthold file of BSNL for more than 1yrs and When BSNL comes after 1 yr…all incoming prices and gprs got slaced by RCom.Delaying launching of BSNL GPRS is due to delay by moc.
    Next when 3g comes , BSNL has highest bid charges but what govt do…it has given limited area not allowing further tender..finally 3G is launched in limited area only.
    Similar case 4g till date moc not allowed bsnl although 4g since jio has come.
    This govt has make the worst ..govt has allowed predatory pricing intentiojally for jio and now NPA in telecom sector is beyond though because till based on strength of work force BSNL has a large customer addition now but as tariffs are so low …network usage charge is not benifiting to TSPs.
    So DOnt write like a paid news… As a esthucal journalist show the public …why telecom jiant Vodafone leaving india..why BSNL has so bleeded by politician to trail teecom products only. Why Airtel also force to join idea voda airtel groups…
    This is due to modi lead govt favour to jio.
    Bloody Jio.

  19. What about your dearest privet players.privet players including RJIO have already borrowed more than seven lacks crore of rupees from Indian PSU banks..and all these private operators including RJIO are under huge debt and loss in FY 18-19.. Indian PSU banks are in trouble only due the loan given to this private telecoms.. remember BSNLs bent is only 11000cr whereas each and every private telecom companies have debt more than 200000cr.. better you first advice government to close all these private operators and to demand them to replay their loans and unpaid spectrum charges to government…You may be paid to tarnish BSNL but try to learn some basic facts and figures before start bluffing..

  20. The nationalization of bank was done by Mrs Indira Gandhi against the advise of FM than. Same way majority PSU are white elephant and doesn’t make sense. Instead when a Gov had 2/3 majority all PSU should have been divested with 25% holding left with government and private public partnership would have forced efficient managem3nt rather than government appointed one where corruption is part of it and MD is politician.

  21. Mr author it seems from ur article that u r privatisation lover… U just want to see reliance jio eating up all the telcos …and in the end will eat up all the innocent public…. Destroying the minds of children by pouring them free internet which is full of nudity and bulnders…the hate coming through whats aap into their venerable soft minds… Thanks to BSNL which is always acted as rate controller.. Had BSNL not been in the market reliance jio would have certainly shoot the priceses of data in the top of the hill…
    This is a deleberate attempt to kill. BSNL by propagating hatered for the company and by destroying the image of BSNL….

  22. The author is not even know the meaning of psu..More over he is not awate of the networth of bsnl. The total external debt of the company is jist 13000 cr as against its networth of 1,5 lakh crs. The question of bankruptcy does not araise here. Similarly PSUs are special purpose vehicles not intended for profit making. The then recruitment in department of telecom was as part of employment creation done by Gov. It is kindly requested that before writing some thing,one must at least k

  23. The author is not even know the meaning of psu..More over he is not awate of the networth of bsnl. The total external debt of the company is jist 13000 cr as against its networth of 1,5 lakh crs. The question of bankruptcy does not araise here. Similarly PSUs are special purpose vehicles not intended for profit making. The then recruitment in department of telecom was as part of employment creation done by Gov. It is kindly requested that before writing some thing,one must at least know the basic aspect about the topic.

  24. Wow. Govt has Rs 7000 crores for a PSUs which serve no purpose. And for Air India too. But can’t find money for the new IITs, AIIMS, etc dozens of which have been announced in the past few years.

  25. BSNL is not being allowed to function independently.
    For each n every financial decisions DoT puts hurdle. Not allowing Bsnl to borrow money from banks for op-ex.
    Its DoT trai may not want Bsnl to survive and allowing Jio to flourish by unhealthy tactics.
    Its because of only Bsnl, we are enjoying low tariffs for data.
    Its only Bsnl come forward at the time of crises like j&k, chennai floods, kedarnath, earthquake etc. No other private operator provides services in rural and aride areas of India. Bsnl does it for social obligations.
    Though Bsnl stands in compitation.
    Bsnl is need of people need of nation.

  26. Sir are you out of mind… Can you specify when GOI gave 7500cr. to BSNL…????

    Rather GOI have received more than 54000Cr. from BSNL since its formation. Search reports.

    And about the Spectrum it has … It is not taken free but at the rate of Highest BID for that spectrum during the auction that too in a single installment.

    About the proposal of 14000cr bail-out package to BSNL, GOI is making fool to public as it is actually giving 14000cr to BSNL. …

    But Truth is that the GOI is allowing BSNL to use 4G spectrum at 7000Cr. (Which BSNL will pay and … 7000Cr. will be borne by GOI in the liue of equity share of BSNL).

    Now this cost of 14000cr for spectrum is Value of highest Bid for the 4G spectrum in the auction taken place in the year 2016 (3years back)…

    This spectrum is worthless today as there is nobody takers for this spectrum as world is moving towards 5G…

    Had GOI allowed BSNL 4G spectrum bin the year 2016 .. the scene would have different today…

    Still without 4G.. BSNL is still adding customers and does exist.. while most of the private companies have closed or merged.. bleeding most of the PSU banks … (and Taxpayers..)

    • यही कटु सत्य है आपने बिल्कुल सही कहा है DOT द्वारा जानबूझकर ब्यवधान किया जाता है कभी भी BSNL को पैकेज नहीं मिला है।और अगर VRS देना है तो देरी क्यों कम से कम युवा कर्मचारियों का भविष्य तो सुरक्षित होगा VRS का विरोध वो कर रहे है जो कोई काम नहीं करते हैं ।और BSNL के नेता अपनी रोटी सेंक रहे हैं अरे BSNL बचाना है तो कुछ अच्छा सोचो युवा बर्ग की सोचो।

  27. The core problem is lazy , not at all dedicated majority of staff aligned to typical non committal mentality .Adopt any measure but unless staff is committed to work seriously nothing is going to improve

  28. The author may please check the facts before publishing. Do you have even an iota that the GoI has spent not a penny on BSNL. It is able to withstand competition from its own internal resources. GoI has not appointed a full time director finance for the last 5 years and Company is run by people from DoT.
    How can it be run commercially when it is not allowed to function independently?

  29. How government can start bankruptcy process against public sector when the public sector are governed by government rules and CMD is decided by government body. If public sector company fails it is the failure of government policy and can any government can blame itself?

  30. Like all past governments, the present one is ‘socialist’. Privatise profits and pass on losses to the tax payer. In this Modi is no different from his predecessors. Nobody talks of reforms in administration, police, judiciary, agriculture, labour, PSUs etc. Pity the Indian voter who ends up distracted with non-issues.

  31. Why wait for a company to get ready for the butcher’s knife. The next government should place sale of all PSUs, not just loss making ones, high on its agenda. When there are cash cows like ONGC, they will be bled for collateral purposes. LIC is the go to guy for meeting disinvestment targets, captive lending for railways. The PSBs have had a near death experience. OMCs are forced to subsidise consumers when oil prices rise. Dividends are gouged out of profit making enterprises, including the RBI, to contain the fiscal deficit. CSR funds of PSUs are diverted to VIP constituencies. Koi zulm aur zyaadti hai jo nahin ki jaa rahi …

  32. The telecom sector as a whole is witnessing a huge fall in earnings. Major players except Jio are in huge losses. The debt of both big players like Airtel and Vodaphone-IDEA are running into 1 lakh crore rupees. But BSNL’s debt is not that high compared to Pvt players. So, BSNL needs govt support in the current situation and professional management.

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