DoT studying security threat of loss-making BSNL-MTNL privatisation

Topics BSNL | MTNL | Finance Ministry

Representative Image
As the finance ministry refuses to part funds for the revival of Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), the Department of Telecommunications (DoT) is busy brainstorming on the security aspect of complete privatisation of the domestic telecom sector, besides persisting with the Centre to infuse the twin PSUs with fresh capital. 

“We are evaluating the security threat posed by complete privatisation of the sector, if any. How do countries like USA, UK and Brazil cope with the safety and security aspect of telecommunication services — they only have private operators,” a senior DoT official told Business Standard.

The department is examining case studies in this regard, from developing economies, too, where the government has no entity of its own in the sector.

Telecom companies in the US are AT&T, Verizon, Sprint and T-Mobile. Britain has Three UK, EE, O2, Vodafone and BT. In Brazil, the bulk of the market is divided between four operators — Telefónica, América Móvil, Oi and GVT. 

The finance ministry (FinMin) would prefer BSNL and MTNL to be shut down. Officials say if this stand prevails, DoT would urge downsizing to save their existence.

“If shutting down of BSNL and MTNL is what FinMin wants, we will request them to at least consider continuing it for services like space, defence, intelligence, railways and government departments for internal usage,” a senior official said.

Waiting anxiously as the employees of both entities. “We are hoping our department (DoT) will save us,” a BSNL employee said, adding that the company has real estate assets worth at least Rs 5 trillion. It and MTNL have land assets at prime locations across the country, including in Mumbai, Bengaluru, Hyderabad, Delhi and the Delhi region.

Both companies are so short of money  that staff salaries are not coming on time. BSNL paid the September salary earlier this month; MTNL is yet to pay its staff for August and September. 

Recently, a meeting of secretaries to the government, convened by P K Mishra, principal secretary to the prime minister, was doubtful on any revival prospects.

Earlier this year, both BSNL and MTNL formally sought relief from the government in the form of conversion of their debt into sovereign guarantees, a pay revision and a subsequent voluntary retirement scheme (VRS).

BSNL also sought fourth-generation technology (4G) spectrum across India through equity infusion of Rs 7,000 crore. MTNL suggested converting its Rs 20,000 crore of debt into a sovereign guarantee and surrendering its 3G spectrum. The proposal was that a proposed VRS package be funded by a bond issue over 10 years.

About half the 176,000 employees at BSNL are estimated to retire in the next five to six years. 

For MTNL, the VRS package could have a revenue impact of Rs 2,120 crore. The company has 22,000 employees. Of this, 16,000 are to retire in five to six years.

BSNL's loss in 2018-19 is estimated to be around Rs 14,000 crore, with a decline in revenue to Rs 19,308 crore. Debt is Rs 13,000 crore.  

Telecom minister Ravi Shankar Prasad had, in his first press conference after assuming charge earlier this year, said the government would revive BSNL and MTNL.

Telecom space worldwide
US:  AT&T, Verizon, Sprint, T-Mobile 
UK: 3(CK Hutchinson), EE (BT), O2 (Telefonical), Vodafone 
Brazil:  Telefónica, América Móvil, Oi and GVT
China:  China Mobile, China Telecom, China Unicorn
India:  Bharti Airtel, Reliance Jio, Vodafone-Idea, BSNL, MTNL


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel