With state-owned Mahanagar Telecom Nigam (MTNL) facing a financial crisis, the government has initiated steps to transfer over 3,000 employees to Bharat Sanchar Nigam (BSNL) and the Department of Telecommunications (DoT). Officials familiar with the matter have also indicated that the government is considering offering employees a voluntary retirement scheme (VRS).
The move aims to reduce costs and address salary payment issues due to MTNL’s financial struggles. Employee expenses, including salaries and benefits, account for 78% of MTNL’s FY24 operating revenue of Rs 728.5 crore. Additionally, the loss-making company faces a massive finance cost of Rs 2,690 crore, which significantly exceeds its earnings in the last financial year.
Sources revealed that general managers at MTNL have been asked to identify 50% of officers for possible deputation to BSNL. Furthermore, a proposal offering VRS and deputation options for MTNL employees has been submitted to the finance ministry by the DoT, with plans to present it to the Cabinet alongside an additional revival package to address MTNL’s debt burden.
MTNL has defaulted on payments to multiple banks due to insufficient funds, prompting the government to step in and cover the interest on bonds issued by the company under a sovereign guarantee. MTNL’s total borrowings amount to Rs 7,873.52 crore, with its overall debt standing at Rs 31,944.51 crore.
The government is also exploring the possibility of transferring MTNL’s operations to BSNL through a service agreement. Under this agreement, BSNL would manage MTNL without merging the two entities, thus avoiding the complications that a merger would entail. BSNL would act as a management agency for MTNL.
During this restructuring, MTNL employees have voiced concerns about the potential relocation of officers deputed to BSNL outside of MTNL’s service areas in Delhi and Mumbai. They emphasized that these officers were originally absorbed into MTNL based on these specific regions and that relocating them could cause unrest. Additionally, employees have requested that they receive promotions on par with BSNL employees to avoid hierarchical disparities and ensure equal opportunities.
MTNL, which operates in Delhi and Mumbai, has about 1.9 million wireless subscribers with a 0.2% market share as of the end of July, according to data from the Telecom Regulatory Authority of India (TRAI). In the April-June quarter, MTNL’s net loss decreased slightly to Rs 773.5 crore from Rs 783 crore in the previous quarter. However, its revenue from operations dropped by 12% sequentially and 8% year-on-year to Rs 183.9 crore.
To date, the government has allocated Rs 3.2 lakh crore in three separate revival packages for both BSNL and MTNL.
