In an attempt to rescue ailing state-owned telecom companies BSNL and MTNL, the government is considering an Rs 74,000-crore bailout plan. The government's rescue strategy involves offering a handsome exit package to thousands of employees, including an additional 5 per cent compensation (ex-gratia) to make the VRS attractive.
BSNL is one of the country's biggest loss making PSU, while MTNL is the third-highest loss making PSU. In FY19, BSNL was grappling with an estimated loss of Rs 13,804 core while MTNL saw a loss of Rs 3,398 crore.
The other state-owned company to have a loss higher than MTNL, apart from BSNL is Air India. If this package follows through then the two PSUs will overtake Air India as the biggest drain on the national exchequer, as mentioned in a report in Times of India.
Officials told the daily that the proposal for which a draft Cabinet note has been circulated said that 4G spectrum valued at over Rs 20,000 crore will be allotted by the government and the rollout cost of Rs 13,000 crore will be paid by the PSUs. The government will foot the bill of over Rs 40,000 crore towards VRS package and early retirement benefits.
The government also believes that the costs of the companies can be reduced by bringing down the retirement age to 58 years from 60 years and offering a lucrative VRS package, as mentioned in the daily.
The government also said that shutting down the PSUs is not much of an option as it will cost Rs 1.2 lakh crore and is unviable. The department of telecom said that strategic disinvestment may not find any takers due to the financial stress in the telecom sector but a joint venture can be explored.
BSNL and MTNL have witnessed poor management, high staff cost, government interference and slow pace in upgrading to new technology while competitors swiftly adapted to 4G and even 5G. These factors have led to a loss in market share in the mobile services business.
Also read: Debt-ridden Air India may not have funds to pay salary to employees beyond October