"The preliminary presentation has been made and the issues have been crystalised ... next time DoT will make a detailed presentation on certain issues and then the group of ministers will take some decisions in principle on those issues," telecom minister Kapil Sibal said. However, when asked about the merger plans between BSNL and MTNL, Sibal said: "We have not discussed it yet." According to an internal DoT note, the merger between the two entities is one of the long-term measures to make the companies profitable.
Other proposals for revival in the short-term include assistance of Rs 10,117 crore for one-time levy for spectrum beyond 4.4 Mhz (GSM) and beyond 2.5 Mhz ( CDMA), preferential treatment for BSNL and MTNL services in government and PSUs and operational level synergy between the two telcos. More medium-term proposals include setting up of a separate telecom infrastructure and creating a separate land development and utilisation company for management and monetisation of land assets held by the two.
The GoM, headed by finance minister P Chidambaram, met for the first time since its inception after Sibal in a letter to PM Manmohan Singh raised concerns over the future of the two telcos. Sibal said the next meeting of the GoM is likely to be held soon. The DoT in its presentation indicated that the cash reserves of the PSU firms depleted post the purchase of BWA and 3G spectrum at auction determined price in 2010. Both the firms jointly shelled out Rs 29,598.35 crore for 3G and BWA airwaves.
"We have basically indicated how both MTNL as well as BSNL were obliged to purchase the BWA spectrum and, of course, paid for the 3G spectrum at the prices discovered in 2010,"Sibal said. MTNL reported widening of the net loss toRs 5,321.12 crore for 2012-13 compared to Rs 4,109.78 crore the previous fiscal and BSNL is expected to post around Rs 8,198 crore in losses for the last financial year.
"The pension liability of MTNL has to be discharged by the company whereas in the case of BSNL, the liability is discharged by government and, of course, the legacy issues, the result of all of which is that the company is not in very good shape as of now-...some immediate solutions are required," Sibal explained. High wage costs had been a major reason for these companies running into losses.
Overall, salary and pension expenses of MTNL employees form 103% of the revenue while for BSNL it is 49%. The members of GoM include Sibal, commerce and industry minister Anand Sharma, Planning Commission deputy chairman Montek Singh Ahluwalia, information and broadcasting minister Manish Tewari and minister of state in PMO V Narayanasamy.
Courtesy: The Economic Times.
Courtesy: The Economic Times.