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Financial position of BSNL and MTNL – A report in the media.

25 Monday Jun 2018

Posted by in BSNL, Telecom

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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.”

Draft National Digital Communications Policy-2018

02 Saturday Jun 2018

Posted by in BSNL, Telecom

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The Department of Telecom (DOT) has published the Draft of the “National Digital Communications Policy – 2018” a few days back. This is in continuation of its National Telecom Policy- 1994, National Telecom Policy – 1999 and NTP – 2012.

All the earlier NTPs have been approved with the intention of bringing private corporates in the telecom sector and weaken the government/public sector telecom. The new Policy, which is not NTP, but named “National Digital Communications Policy – 2018” is also in the same direction. There is no much assistance to the PSUs, BSNL or MTNL. There is no provision to give 4G / 5G to them. High words are used, but it all amounts to favouring the private corporates.

With BSNL and MTNL in the field, India is providing one of the cheapest service in the world. Destroy these PSUs, the people will have to pay at least ten times for the service being provide to them. The wolves and hyenas, the MNCs, are waiting their time for finishing the PSUs, with the tacit support of the government. It will be a catastrophe for the entire population of this great country. A serious struggle and movement by the workers with the support of the people alone is the remedy.

Is the government moving for sale of MTNL ? Defeat it with all our might!

23 Monday Apr 2018

Posted by in Telecom

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The financial sharks and corporates are pushing the government for sale of MTNL. Arguments in favour of the same are given wide publicity. Such a report from the Financial Express is given below. Unless there is strong opposition and fight, the government may move in that direction. Eternal vigilance is required.

” Sources told FE that closing MTNL’s operations is feasible from all angles barring one — it has a huge staff strength of 27,919 which needs to be taken care of. (PTI)
As state-owned Mahanagar Telephone Nigam (MTNL), which provides telecom services in Delhi and Mumbai circles, continues to struggle with declining revenues and mounting losses in a fiercely competitive market, the government is finally exploring the option of shutting down the debt-laden firm and monetise its land, buildings and tower business. What has forced the government to explore the option is that MTNL’s 20-year licence fee will come up for renewal in April next year, which would require the company to pay an unaffordable Rs 11,000 crore.

Sources told FE that closing MTNL’s operations is feasible from all angles barring one — it has a huge staff strength of 27,919 which needs to be taken care of. Barring the group A officers who are mostly Indian Telecom Service officers on deputation from the department of telecommunications, bulk of the workforce belongs to the company and this segment would resist any attempt of closure. As far as the firm’s mobile subscribers are concerned, they can easily port out to other operators which has happened of late when some private operators shut down their services. MTNL’s landline business can be assigned to fellow PSU, BSNL which currently does not have presence in Delhi and Mumbai.

In the past, different governments explored the possibility of merging MTNL and BSNL and creating one single company but it could not fructify because of HR-related issues. Any merger is not possible today because even BSNL is incurring losses for the past 5-6 years and is saddled with a huge workforce. Unlike BSNL, the land and real estate asset of MTNL can be monetised as their ownership vests with the company. It has a total of around 2.5 million sq ft of commercial land and 4 million sq ft of residential assets, spread over the two cities and a large part of these can be monetised either through sale or leasing for commercial purposes.

In fact, some time ago, the company had got a valuation of its property done by the real estate consultancy firm Jones Lang LaSalle, which had said that it can raise around Rs 4,000 crore through a combination of selling its land bank and leasing its buildings. A look at the company’s financials prove that it is beyond redemption. Its employee cost is at an unsustainable level of close to 100% of its revenues. Its losses are more than its revenue — the company reported a net loss of Rs 2,941 crore in 2016-17 while revenues were at Rs 2,870 crore (see chart). It is meeting annual interest costs of about Rs 1,500 crore by taking more loans.

In its annual report for 2016-17, the company acknowledged the danger its handicap and protrayed a bleak outlook by saying:“Because of high leverage and heavy repayment schedule of loans as well as interest payment to banks and financial institutions in the coming years, there is possible risk of liquidity crunch in near future, which will be a great threat to MTNL to keep it as ongoing concern in near future”.

The company has already conveyed to the department of telecommunications its inability to provide over Rs 11,000 crore by April next year to pay for one-time spectrum charges and other fees to the government to renew its 2G licences. Being in a debt trap of Rs 19,510 crore as on March 31, 2017 (including Rs 4,533.97 crore of the bonds, the liability for interest and principle of which are with the Centre), it is not even in a position to meet the capex requirement to upgrade its telecom infrastructure.

The policy of the NDA government has been to get rid of non-viable units and invest its scarce resources on developmental programmes. As per this policy, the Niti Aayog has recommended winding up over two dozen ailing PSUs, many of which are currently under the closure process.In order to facilitate the process, the settlement of statutory dues and payment to secured creditors are now being completed within two months after the Cabinet approval. It has set timelines for the disposal of movable assets, sale of land and retrenchment of employees not opting for voluntary retirement scheme (VRS) to fast-track the closure of sick PSUs.

MTNL has land and buildings at premium location in Delhi and Mumbai which could fetch a substantial amount, if monetised. According to the annual report of MTNL, the gross value of its property, machinery and equipment were about Rs 10,000 crore on March 31, 2017.

According to the department of public enterprises’ guidelines issued in FY16, the sick units would be closed within one year from the date of issue of minutes of the Cabinet approval. However, the process practically drags on for years. The Centre holds a 56.9% stake in MTNL, Life Insurance Corporation 18.81% and the balance stake is with the public.”

NTP 2018 is in the final stage

09 Monday Apr 2018

Posted by in BSNL, Telecom

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The National Telecom Policy is being finalised by the Dept. of Telecom and will be submitted to the government within one month as per press reports. There is no doubt that it will be in favour of the private telecom companies and especially for Reliance Jio. Each earlier NTP has been against the interest of BSNL and in favour of private companies and nothing different is expected from this one. What else can be expected from the Modi Government?

Warm Greetings on BSNLEU Foundation Day, 22nd March 2018.

22 Thursday Mar 2018

Posted by in BSNLEU, Telecom

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(Com.V.A.N.Namboodiri, GS, E.III(N) Union presenting the report at the Visakhapatnam Conference.)

BSNLEU is 17 years old. BSNL Employees Union, the majority recognised union of the BSNL workers, was formed on 22nd March 2001, in the National Convention of eight telecom unions held at Visakhapatnam, in the presence of Com. E.Balanandan, President of CITU and one of the greatest working class leaders India has seen.

Though started with about 50,000 – 60,000 workers, it grew to be the biggest union in BSNL with more than one lakh workers, despite the fact that there was no recruitment and thousands were retiring every year. This was a herculean task, but the united team of the BSNLEU leadership made the impossible in to possible.

BSNLEU as the recognised union separately, and also jointly with other unions, both executive and Non-executives, defeated the nefarious designs of the central government, both NDA and UPA, to disinvest BSNL, retrench about one lakh workers through VRS, unbundle the precious copper cables and so on. BSNLEU took the initiative to form the Joint Forum of the Unions and Associations, under which organisation, the battles were fought and the anti-worker decisions of the government defeated.

BSNL and its workers are  facing serious challenges to their existence. The neo-liberal policy initiated by the Congress government in 1991 and aggressively being implemented by  the present BJP government is making it difficult for the PSUs to sustain and grow. The NDA government as per the recommendations of the NITI Ayog is moving for privatisation of about 70 PSUs this year, in which the name of BSNL is also there. Wage revision due from 01-01-2017 is being denied. To destabilise BSNL, a Tower Company is being formed, taking away the towers of the company, which will seriously dent the existence of BSNL. Pension Revision is also delayed / denied. However, after two days strike and massive Sanchar Bhawan March, the Secretary  DOT and Minister has come forward for discussion and positive development is taking place on these issues. Sustained effort and struggle will be required to achieve the above demands.

The two associations, AIBDPA and BSNLCCWF formed at the initiative of BSNLEU has grown and strengthened. The demands of the workers, the pensioners and the casual contract labours are interconnected and inseparable. That is why united struggle.

It is in this situation that the workers are observing and celebrating the 18th Foundation Day of BSNLEU. Various programmes, including meetings and rallies are being held all over the country, observing BSNLEU Day. Let us remember our past struggles and sacrifices so that we can advance with more vigour, determination and strength.

BSNLEU Zindabad!

Workers Unity Zindabad!

No Restrictions on Promotional Offers – TRAI

19 Monday Feb 2018

Posted by in General, Telecom

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The TRAI has issued instructions ending the restrictions put on the promotional offers by the telecom companies. It is clear that this position is taken by the TRAI only to help Mukesh Ambani owned Reliance Jio, which was offering several packages violating the then existing TRAI orders. Now free hand is given to Reliance Jio for its predatory tactics. The TRAI statement says:

“The authority is of the view that no restrictions need to be imposed on the number of promotional offers that can be simultaneously launched and time lag between same or similar promotional offers in a licensed service area. Restrictions may not be in the interest of consumers apart from possibly hindering competition.”

Mukesh Ambani seems to be the central point on which every decision is being taken by the TRAI. How absurd!

2G Spectrum scam case dismissal – BJP and Congress governments responsible

22 Friday Dec 2017

Posted by in General, Spectrum, Telecom

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The CBI Special Court has acquitted all the accused in the 2G spectrum scam case, including former Communications Minister A.Raja and DMK M.P.Kanimozhi. The judge has stated that the prosecution utterly and miserably failed to prove the charges.

There is nothing much to get surprised. The UPA government wanted to save its face and Prime Minister Manmohan Singh and went slow in the matter. BJP, which during the last general election utilised the scam effectively also went slow after winning the election.

The main reason? In addition to the political leaders there are many corporates and telecom companies in the list of accused. Besides Raja and Kanimozhi, there were other accused like Shahid Balwa, Vinod Goenka, Asif Balwa, Rajiv Aggarwal, Karim Morani, P. Amirtham, M.K. Dayalu Ammal and Sharad Kumar. The charge sheet filed by the ED had also named the following nine companies as accused- Kalaignar TV, STPL (now Etisalat DB Telecom (P) Ltd), Kusegaon Realty (P) Ltd, Cineyug Media & Entertainment (P) Ltd, Dynamix Realty, Eversmile Construction Company (P) Ltd, Conwood Construction & Developers (P) Ltd, DB Realty Ltd and Mystical Construction (P) Ltd (earlier known as Nihar Constructions (P) Ltd).

NDA government wants to tag in DMK. It also wants that no wrong message goes to the corporates that the government is against the interest of the corporates.

Hence even after 7 years of continuous sittings by the CBI court, three years under UPA and four years under NDA, no important evidence was presented by the CBI to ensure that the accused are punished. It is once again proved that corporates’ interests are more important than political interests.

National Telecom Policy 2018 by next year – Communications Minister

21 Thursday Dec 2017

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The government is looking to finalise the National Telecom Policy 2018 by March next year, Communications Minister Manoj Sinha informed Parliament today.

“The Department of Telecommunications envisages to formulate a new National Telecom Policy in view of rapid technological advancement in the sector. The work on formulation of the National Telecom Policy 2018 has been initiated and is targeted to be finalised by March 2018,” Sinha said in a written reply to the Lok Sabha.

He said that several working groups have been constituted on different themes for this purpose.

DoT officials have earlier said that the draft of the new telecom policy will be placed in public domain for seeking their views.

The DoT has formed 13 working groups to prepare a draft of the National Telecom Policy. (New Delhi, Dec 20 (PTI)

National Telecom Policy 2018.

28 Saturday Oct 2017

Posted by in BSNL, Spectrum, Telecom

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The government is in the process of formulating the National Telecom Policy 2018, it is reported.

The National Telecom Policy 1994, initiated private entry in Telecom. NTP -1999/2000 gave many subsidies to the private operators. NTP-2006 continued the same policy and in fact resulted in cancellation of BSNL tenders for mobile lines. What will the proposals in the NTP – 2018? May be more benefits to the private operators and injustice and ignoring the PSUs BSNL and MTNL?

In his letter to Com.V.A.N.Namboodiri, Convener Joint Forum and General Secretary BSNLEU, dated 04-01-2006, just before the start of the strike on 4/5 January, then Secretary DOT has given written assurance that “the views of the union will be duly considered as and when the draft of the telecom policy is formulated.” This was in addition to the assurance that there will be no disinvestment of BSNL and also that there will be no unbundling of the copper cables. The strike was withdrawn on the basis of these assurances in the last minute.

As such, the government is committed to hear the views of the unions/associations in BSNL on the formulation of the next Telecom Policy which is expected by next year.