Telecom Minister Ravi Shankar Prasad on Wednesday blamed stiff competition, high employee cost and no 4G services for the poor financial state of BSNL and MTNL.
Absence of 4G services and high employee costs are hittingat the competitive strength of the public sector companies – Bharat SancharNigam Limited (BSNL) and Mahanagar Telecom Nigam Limited (MTNL) – at a timewhen private carriers are offering data services at near to the ground tariffs,Communications and IT Minister Ravi Shankar Prasad said in LokSabha, whileadding that proposals to revive the deeply-stressed companies was beingprepared.
“For BSNL and MTNL, stiff competition in mobilesegment, high employee cost and absence of 4G services (except in few placesfor BSNL) in the data-centric telecom market is eroding their competitivestrength,” the Minister said in LokSabha on Wednesday.
He said revival plans of BSNL and MTNL are underwaycurrently.
“Indian Institute of Management, Ahmedabad and Deloittewere engaged to facilitate the preparation of the revival or restructuring planof BSNL and MTNL, respectively. Pursuant to their recommendations and approvalof respective Boards, a comprehensive revival plan for BSNL and MTNL is underpreparation,” the Minister added.
Requests from the carriers to grant additional spectrum withgovernment support for providing 4G services is also included in the revivalplan, and the telecom requests from the carriers to grant additional spectrumwith government support for providing 4G services is also included in therevival plan, and the telecom department is taking steps, such as providingcontracts to install services in Left Wing Extremist and low connectivity areasand hotspots in rural areas.
Prasad clarified that no proposal for closure of both PSUswas under consideration of the government. As of May-end, BSNL had 1.63 lakhemployees and MTNL had 21,679 employees.
Prasad also pointed out the total employee cost of MTNL andBSNL far outweighed the total employee cost for private telcos. The employeecost for BSNL is 75.06 per cent while for MTNL the employee cost is 87.15 percent of the total income.
Employee cost for private telecom companies varies between 2to 5 per cent of the total income. “We want to take care of employees andrevive PSUs because for fair competition in market, it is important to havethese PSUs.”
Many MPs in Parliament had raised the issue of the ongoingcrisis in BSNL — its poor financial status as well as network problems.
Responding to the allegations, Ravi Shankar Prasad said:”We want BSNL to survive and work effectively. As far as their balancesheet is concerned, we are looking into the matter.”The minister said there is no proposal forclosure of both PSUs was under consideration of the government. As of May-end,BSNL had 1.63 lakh employees and MTNL had 21,679 people on their rolls.