Nothing to Worry, Nothing to Cheer - Union Cabinet Approves Revival of BSNL and MTNL

Dear Members,

The Union Cabinet has approved on 23.10.2019 the Revival Plan of Telecom Sector CPSUs, i.e. BSNL and MTNL. The Salient Features of Revival Plan are as under, -

a.           Allocation of 4G Spectrum/Capital Infusion of Rs. 20000+Crores:

4G Spectrum Allocation is mere an administrative action. The spectrum allocation shall be funded by capital infusion, i.e. book adjustment, which means there shall be no cash inflow to the CPSUs. Whatever be the cost of spectrum shall be the amount of capital to be infused.

b.           Sovereign Guarantee for Long Term Bonds of Rs. 15000 Crores:

The Union Government to stand as Guarantor for Long Term Debt Bonds. The funds of Rs. 15000 Crores to be raised by issuing bonds shall be utilised partly for debt restructuring (i.e. squaring-off of existing loans) and partly for Capex/Opex (i.e. Network Expansion and Working Capital). In nutshell, the meagre amount of Rs. 15000 Crores is unlikely to result in a sufficient cash inflow.

c.           Voluntary Retirement Scheme for Staff:

The plain reading of plan suggests that the Union Government will bear the cost of VRS (i.e. Gratuity, Pension and Commutation and Ex-gratia) through Budgetary Support. BSNL has already been paying Pension Contribution to Union Government in lieu of which Gratuity, Pension and Commutation is otherwise payable. The only crux is ex-gratia, the cost of which Union Government will hopefully bear. There seems nothing for BSNL Recruited Employee, who are in the zone of VRS. We therefore insist that as a part of VRS Plan the liability for provisioning of 30% Superannuation Benefits for BSNL Recruited Employees since 01.10.2000 must be created in the books of BSNL.

d.          In-principle Merger of BSNL and MTNL:

The move of merging BSNL and MTNL is expected to ensure the synergy gain unlike the merger of Air India and Indian Airlines which met the fate of hard landing. We also hope that the HR related issues will also be synchronised, before going ahead with the proposal of merger, firstly by upgrading the pay scales of BSNL at par with those of MTNL.

e.           Monetisation of Assets:

The monetisation of assets to raise the resources for retiring debt, servicing bonds, network upgradation, expansion and meeting the operational fund requirements. We insist that the land assets are capital assets and its sale proceeds must be utilised only for generation/acquisition of capital assets. Thus, there is no justification for using their proceeds for recurring expenditure. Further, all the assets, which have already been transferred by BSNL to various Government Departments and Bodies since 01.10.2000, should also be included in monetisation plan. The monetisation of assets must take place in very transparent manner through auctioning route.

Click here for PIB Information

Wishes and Greetings

Surinder Mahar

President, BESA