A report in the press regarding the financial position of BSNL and MTNL is given.Both the PSUs are in the list of NITI Ayog for privatisation or closure. The full responsibility of the loss and decline is only the result of the government to favour private telecom companies and downgrade telecom PSUs. The government which can ensure loans and concessions to the extent of thpusands of crores of rupees to Adani and Ambani has no inclination to help its own companies. Hence the present situation. The report in the press is given below:

“The prime minister’s office and the department of telecom have discussed a survival mechanism for telecom PSUs BSNL and MTNL whose revenue, market share and subscriber base continue to erode.

According to sources, under the plan 4G spectrum worth Rs 13,000 crore could be allotted to them shortly and the more vulnerable MTNL can hope to get about Rs 1,100 crore from the Centre for a fresh VRS package.

Official sources said the situation is more serious for MTNL as the listed entity is almost on the verge of breaking down, completely surviving on bank working capital loans for operations expenditure.

A few decisions are expected shortly and things could be expedited now onwards, sources said, adding that the prime minister’s office (PMO) has shown interest and concern over telecom PSUs, may be after the failure of Air India disinvestment.

Competition from private telcos, especially Jio, is breathing down their necks. As per an estimate, BSNL and MTNL need about Rs 18,000 crore immediate fund infusion for their continued operations, which includes 4G spectrum if government issues fresh equity in them.
Both the PSUs have sought 4G spectrum partly through equity routes which make the cost of spectrum for MTNL at Rs 6,500 crore for 10 Mhz in Delhi in 1800 band and 5Mhz in Mumbai in 2100 band.

BSNL needs 5 Mhz in 2,100 band for rest of India operations which too comes to about Rs 6,500 crore as 50 per cent of the cost of spectrum and the rest of the spectrum cost is expected to be covered through government equity.

While BSNL meets its opex and capex through borrowings and service revenues, MTNL needs government support for meeting working capital needs. It also needs Rs 2,800 crore interest amount reimbursement on an old loan taken for spectrum and Rs 1,100 crore for financing a VRS for 5,000 employees.

MTNL has a bloating staff strength of 30,000, while BSNL has over 2 lakh employees. The financials of MTNL is so bad that it is carrying on with working capital loans on a government guarantee.

MTNL had told DoT that it is operating under three main constraints — a high manpower numbering 25,000, a Rs 17,500-crore loan burden and lack of investment in the last seven years.

To tackle the manpower problem, MTNL had suggested the government to fund its VRS programme as and when it takes place since the majority of this 25,000 staff is from the DoT. The PSU has worked out that for offering voluntary retirement to 5,000 employees, it will need at least Rs 1,100 crore,

The PSU is saddled with a debt of Rs 17,500 crore, out of which the interest component is Rs 1,450 crore. MTNL had earlier written to the DoT to allow it to carve out the land &and buildings and the debt so that the MTNL balance sheet becomes debt-free, without putting any burden on the exchequer.

Air India, MTNL and BSNL are among the top five loss making PSUs in the DPE list.

MTNL’s debt stands at a staggering Rs 17,000 crore and its annual interest burden is close to Rs 1,450 crore. Bruised by competition from private sector players, MTNL’s losses stood at Rs 2,893 crore in 2014-15, Rs 2,005 crore in 2015-16, and Rs 2,970 crore in 2016-17.

Telecom minister Manoj Sinha, in a written reply to the Lok Sabha in February had pointed out that both BSNL and MTNL have been incurring losses for a number of years, and therefore have been declared as incipient sick according to the Department of Public Enterprises (DPE) guidelines.

BSNL’s revenues in FY17 declined to Rs 31,533 crore against Rs 32,411 crore. The PSU was hoping to turn the corner by being profitable in 2018- 19, which is now shifted to 2019-20, if it starts 4G services and the competition eases. Its net loss marginally narrowed to Rs 4,793 crore against Rs 4,859 crore in the previous fiscal..

The accumulated loss of BSNL has now swelled to over Rs 36,000 crore ($6 billion), with the company making losses since 2009-10.

While MTNL has a negative market share with subscribers declining every quarter, BSNL’s market share in mobile market is 10 per cent.”