Government Urges BSNL to Look at Options Including Closure of Services as Losses Mount

HIGHLIGHTS

• Introduction of VRS and early retirement for the employees would save BSNL heavy costs
• The telco will look at options like disinvestment, closure, revival and more

Bharat Sanchar Nigam Limited (BSNL), the government led telecom operator has been advised to look at all options which it can pursue regarding the PSU’s future. The telecom operator has been told to explore options like disinvestment, revival or even closure from the authorities after its long stint of making massive losses. Notably, BSNL has become the biggest loss-making PSU for the government. To look at the figures and to measure the scale at which it is making losses, it is worth noting that in the 2015-16 and 2016-17, BSNL’s losses stood at Rs 4,859 crore and Rs 4,786 crore respectively. Whereas, in the 2017-18 FY, BSNL’s losses widened to Rs 7,992 crore. This figure translates to about 25% of the total PSU losses that the government is making from all its companies.

Telco Secy Asks BSNL to Present Analysis

The government led telecom operator was given the direction during a meeting with the telecom secretary, Aruna Sundararajan. BSNL, Chairman and Managing Director, Anupam Shrivastava presented the company financials and a projection about the company’s health to the telecom secretary. BSNL CMD also spoke about the company’s accumulated losses since the entry of Reliance Jio into the market and touched topics like Voluntary Retirement Scheme (VRS) and early retirement plans for employees.

Among all the options which were proposed to BSNL, the most interesting of all was the possibility of closure. The company was asked to present an analysis of what would happen if the business was shut down. The telecom secretary asked BSNL to submit “comparative analysis of all options available with the government, i.e. strategic disinvestment of BSNL, closure or revival with financial support.”

VRS and Early Retirement Another Option for BSNL to Reduce Wage Bill

Another issue which BSNL raised in the presentation was regarding the ageing employee base of the company. The telco said that if it reduces the number of these employees or brings down the average age of its workforce, then it would save a lot of costs. The reduction of such employees would come through either VRS or by bringing down the retirement age from 60 to 58. Doing this could save the telecom operator, approximately Rs 3,000 crore in the wage bill. This news is reported by TNN.

Speaking about the VRS, BSNL said that it would target the employees in the age range of 56-60 this way it would make 67,000 employees eligible for the same. BSNL said, “Assuming 50% of these employees (33,846) opt for VRS, this shall result in a saving of Rs 3,000 crore in salary bill. The ex-gratia shall vary from Rs 6,900 crore to Rs 6,300 crore for various fitment.”

BSNL also suggested that the considerable land banks and the real estate which the company owns can be monetized as well. As per the estimates asserted by the company, the total land banks and buildings are worth Rs 15,000 crore which can likely be liquidated in the coming two or three years by the department of investment and public asset management (DIPAM).

Source - TT