The Union Cabinet’s decision to approve Rs 89,000-crore bailout package for Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) — two loss-making public sector telecom service providers — is a step in the right direction, given the strategic importance of these entities.
This is the third tranche of the bailout package from the government in the last four years. The first revival package worth Rs 69,000 crores was approved in 2019 and the second one of Rs 1.64 lakh crores was announced in 2022. Cumulatively, the government spent Rs 3.22 lakh crores for two state-owned units in the last four years — averaging at Rs 80,500 crores a year or Rs 220 crores a day.
As on March 31, 2023, BSNL had 60,104 employees on its rolls, while MTNL, which serves only Delhi and Mumbai, had 3,500 employees. Because of the bailout packages and the government’s attempts to reduce manpower cost, the total number of employees working in both companies has declined by over two-thirds from 1,90,000 in 2019 to 63,000 in 2023.
As a result of the first two packages and lower staff costs, BSNL began to record operating profits since FY 2021-22 and the total debt of BSNL has reduced from Rs 32,944 crores to Rs 22,289 crores.
According to the government, the package also includes the allotment of 4G/5G spectrum for BSNL through equity infusion. BSNL has recently signed an agreement with Tata Consultancy Services (TCS) for the deployment of the 4G network across India, when Reliance Jio and Airtel are competing to roll out 5G Internet — a development that paints BSNL as an entity that cannot exist in the highly-competitive telecom sector without crutches handed out by the government using taxpayers’ money.
The government should fund all operations that BSNL undertakes to connect areas that are not served or underserved by private companies and nudge BSNL to adopt the asset-light model by monetising its land parcels and later list it on stock exchanges.
