Merger, land sale, VRS: Govt to consider options to revive ailing BSNL, MTNL

The Centre will attempt to revive struggling state-owned telcos BSNL and MTNL, sources have told Zee Media. A high level committee is set to begin deliberations on how the telcos may be revived. The sale of the vast amounts of land held by the telcos is likely to figure in the efforts to revive them.

A Committee of Secretaries is set to meet on July 4 to discuss the revival efforts. The agenda for the meeting, which has been accessed exclusively by Zee Media, shows that the committee will discuss four main options on how to go about the revival. The committee is also set to explore the feasibility of merging BSNL and MTNL into a single entity.

The liquidation of land holdings is likely to play a key role in the revival. Land monetisation is being seen as an option to acquire funds to address the cash crunch that BSNL and MTNL are suffering from. The telcos hold a large number of properties across the country, with many of its offices and exchanges housed in prime locations.

The telecom boom in India combined with the explosion of private players has dealt years of severe blows to the state-owned telcos, leaving them with massive cash flow problems. Especially problematic for them has been the lack of rationalisation of staffing resources. BSNL had recently said it doesn't have enough money to pay salaries for June.

"The employee cost for BSNL is 75.06% and for MTNL it is 87.15% of their total income. The same for private telecom companies varies between 2.9% to 5% of their total income," noted Union Telecom Minister Ravi Shankar Prasad. He said the government is committed to reviving the telcos while also keeping the welfare of the staff in mind.

Sources have told Zee Media that the government would consider the option of slimming the employee head count by giving staff the option of voluntary retirement.

Prasad told Parliament on Wednesday that the government has asked IIM-Ahmedabad and consulting firm Deloitte to prepare a roadmap for restricting and reviving BSNL and MTNL.