Parliament panel pitches for carving out MTNL’s debt, assets worth Rs 26,500 crore

Money Control, March 21, 2022

The Department of Telecom (DoT) should consider carving out MTNL’s debt and assets worth over Rs 26,500 crore into a special purpose vehicle and then merge its operations with BSNL, according to a Parliamentary panel.

The Parliamentary Standing Committee on Communications and Information Technology chaired by Lok Sabha member Shashi Tharoor on Monday said there is still hope from BSNL which is trying to earn revenue.

It also recommended that the loss-making firm should be allocated spectrum for rolling out 5G services at par with private telecom operators in the country. According to a submission made by BSNL and MTNL Chairman and Managing Director PK Purwar to the panel, BSNL is expected to turn profitable by 2025-26 while survival of MTNL is not possible because it has a debt of over Rs 26,000 crore and revenues of Rs 1,300 crore.

“The committee recommends that the department should consider various options including carving out the debt and assets like in Air India and merging operations with BSNL as suggested by CMD, BSNL & MTNL and come out with some viable proposal regarding future of MTNL,” the panel said in its report tabled in Parliament on Monday. The panel also said it was conscious of the fact that any decision on closing MTNL would have a negative impact on the public sector banks.

MTNL was earlier expected to turn profitable by 2020-21 and BSNL by 2023-24 after both the PSUs were jointly given a relief package of around Rs 70,000 crore in 2019. “With Rs 26,000 crore debt, even if God comes to earth and tries to address its problems, the company cannot be revived. It is a fact of life; we have to accept it,” MTNL CMD told the panel.

The panel noted that in spite of the implementation of the revival plan, the projected net loss of BSNL for the year 2022-23 is Rs 5,986 crore. The projected net loss of MTNL for the year 2022-23 is Rs 3,139.60 crore. The company, however, is reporting an operational profit.

The panel was also informed that the implementation of the revival plan, VRS, has been successfully implemented at BSNL and MTNL. It has led to around 50 percent salary bill reduction at BSNL and around 90 percent at MTNL. The DoT informed the committee that the projected net loss of BSNL is due to the absence of 4G services, decline in landline revenue, non-availability of funds for capital expenditure.

The government has allocated an amount of Rs 44,720 crore to BSNL for the implementation of various revival measures during 2022-23 and an amount of Rs 23,270 crore (inclusive of GST) is allotted for the cost of 4G spectrum in the financial year 2022-23. In the report, the panel said that rolling out of 4G services by BSNL will greatly help the company in not only strengthening its foothold in the telecom sector but also in increasing its revenue earning.

“The committee also recommend that BSNL should also be allocated 5G spectrum in all the bands so that BSNL can roll out 5G services along with private telecom service providers. It is essential that BSNL is provided with a level playing field in rolling out 5G services and purchase of equipment like private telecom service providers,” the panel said.

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