BSNL and MTNL revival strategy meet on May 10
Telecom Lead India: The Group of Ministers (GoM) is likely to meet on May 10 to discuss revival plan for BSNL and MTNL.
The two loss-making public sector telecom companies need fresh funds and strategies to survive in the Indian telecom market and compete with mobile operators such as Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Reliance Communications, etc.
The GoM headed by finance minister P. Chidambaram will decide on the future of BSNL and MTNL. Recommendations will go to the Cabinet for the final decision, PTI reported.
The revival is significant as MTNL is likely to become a sick company as its net worth has been eroded. BSNL is expected to make loss in the range of Rs 10,000 crore in the current financial year.
MTNL losses stood at Rs 4,018.44 crore in FY 2012.
Earlier, telecom minister Kapil Sibal recommended for a strategy meet to revive both the companies. Revival is expected to assist Indian mobile users to continue to receive cost effective telecom plans. Without the presence of both MTNL and BSNL, private telecom operators would have increased cellular tariffs.
Meanwhile, salary burden of BSNL in 2011-12 increased to Rs 13,406 crore, almost half its revenues, with as much as Rs 5,000 crore being spent on one lakh employees who were in excess of the requirement.
The salary cost of the telecom firm was Rs 8,809 crore in 2007-08, which accounted for around 23 per cent of its revenues, Parliamentary panel has said.
BSNL revenues declined to Rs 27,934 crore in 2011-12 from Rs 38,053 crore in 2007-08.
The employee strength of BSNL was 3.97 lakh in 2000 when it was created. It had come down to 2.58 lakh as on March 31, 2012.
BSNL said during the last five years, about 841 executives of a total strength of about 56,000 have taken VRS, whereas 27 have resigned from the services.