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After benefit freeze, BSNL staff gets salary scare

Mar 14 (AZINS) Telecom sector continues to be in doldrums. The ripples of entry of new player Reliance Jio are still being felt, even after two years.

This time the casualty is state-run telecom player BSNL, which has for the first time in its history delayed salary payment of its employees.

Though the stressed telco on Wednesday assured its employees that all dues – around Rs 850 crore – will be cleared by March 21, one could foresee such a scenario after the company's decision to freeze LTC (leave travel concession) benefits and control medical expenses of its employees in a bid to cut down costs drastically.

BSNL in a statement said the salary of BSNL employees in Kerala, Jammu and Kashmir and BSNL corporate office (excluding senior officers and the Board) has already been disbursed while the salary for remaining circles will be disbursed before March 21, through its internal accruals.

Another telecom PSU MTNL has also been given Rs 171 crore (dues of MTNL) by the Department of Telecommunications (DoT) to pay its employee salaries.

The employees' union, All Unions and Associations of BSNL (AUAB), has written a letter to telecom minister Manoj Sinha asking the government to release funds so that the salaries can be paid and the firm revived. "Financial crisis is being faced by other operators also but they are managing the situation by infusing huge amounts."

A revival package for BSNL has been under consideration of the DoT since 2017. BSNL had submitted a detailed project report to acquire 4G spectrum worth about Rs 13,885 crore. A preliminary report by IIM Ahmedabad has also been submitted recently by BSNL which suggests giving VRS (voluntary retirement scheme) to about 35,000 employees at a cost of Rs 13,000 crore.

For BSNL, which has an employee base of over 1.76 lakh, a VRS package of Rs 6,365 crore is being considered, while for MTNL, which has about 22,000 employees, the VRS is expected to be around Rs 2,120 crore.

In the last meeting of the Digital Communications Commission in February, the revival package came up for discussion but no final decision was taken. DoT has proposed that VRS be funded through a long-term bond issue over 10 years while the debt is recommended to be completely financed through lease of land.

Both the PSUs have high debt as well – MTNL's debt stands at Rs 20,000 crore while for BSNL it is about Rs 15,000 crore. As per estimates, around 16,000 MTNL employees are expected to retire in the next 5-6 years, while in BSNL 75,000 employees are expected to retire in the same period. The revenue to wage ratio in case of MTNL has swelled to 90%, while in the case of BSNL it is around 60-70%. BSNL reported a loss of around Rs 8,000 crore for FY18.

The main problem of the two telecom PSUs has been a huge employee base. A major portion of the revenues goes towards meeting staff expenditure. Even with the change in technology, the headcount is on the higher side compared to private telecom players who have about 25,000-30,000 employees.

The entry of Reliance Jio in late 2016 has pushed the financial of incumbents, including that of BSNL, on a downward spiral, apart from triggering a consolidation phase in the industry, where now only three private players are left along with BSNL/MTNL.

BSNL and MTNL have been posting losses and struggling to survive in a hyper-competitive market. In the third quarter of fiscal 2019, Vodafone Idea posted a loss of about Rs 5,005 crore while Airtel posted a 72% decline in profits and Reliance Communications knocked the doors of National Company Law Tribunal (NCLT) for insolvency, the second telecom firm (first one being Aircel) to do so in recent times. However, Reliance Jio has managed to turn profitable in just two years of its operations.

VRS IN WORKS

  • For BSNL, which has an employee base of over 1.76 lakh, a VRS package of Rs 6,365 crore is being considered
  • For MTNL, which has about 22,000 employees, the VRS is expected to be around Rs 2,120 crore.

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