Economic Highlights

New Delhi, 29 July 2019

BSNL & MTNL

BUSINESS CRAWLS, REVIVAL CRITICAL

By Shivaji Sarkar

Digital India’s backbone is in severe crisis. The worst BSNL crisis is hitting trade and business all over the country and has also exposed the private telecoms. They are not found as efficient as the crisis-ridden government backbone and most of these are deficient in services.

In three quarters Rs 2.6 crore fine has been slapped on telcos by TRAI since October 1, 2017. Vodafone had the highest penalty of Rs 1.6 crore, Rs 50 lakh on Aircel, Rs 29.5 lakh on Tata Teleservices, Rs 13 lakh each on state-run BSNL and Norwegian-run Telenor, according to a recent answer in Rajya Sabha.

The BSNL, despite government’s effort to revive, remains in a difficult situation. Both phone and internet lines are either not operating or operating at such low speed that banking, financial and data transactions are hit all over the country. Losses to businesses are thus huge.

Though the department of telecom has asked State power bodies not to disconnect its connections, the State bureaucrats are not heeding to the advice. They say that pending payments are marked against their individual performances and they need to act.

All over the country, starting from Uttar Pradesh and Uttarakhand, the rural hinterland exchanges are either not operating or only partially functional. This has put India’s businesses at stake as over the years much of it is through digital transactions, which none other than the Government is pushing for.

Non-payment of energy bills closed down 1083 mobile towers and 524 telephone exchanges, Union Communications Minister Ravi Shankar Prasad has told Parliament recently. Besides, 258 BSNL mobile towers are not functional on account of non-payment of dues to land owners. The BSNL says that they are pursuing land owners telling them that the payments would be made in due course. It is not only reeling under debt of more than Rs 30,000 crore, but its costs and expenses are ever increasing. Worse, it is even mulling firing 35,000 employees, as their allowances and perks are already being denied.

The staff salary remained unpaid since February. It was paid only in June. Currently, over 60 per cent of BSNL's revenues and 90 per cent of MTNL's revenues are used to pay salaries. The government is preparing a ‘revival plan’ for both BSNL and MTNL. It is exploring options to provide long-term stability for their revival. The plan may include measures such as salary cuts, and accountability of staff, in which employees have to either perform or perish.  

It is a sheer irony that despite crisis, the total market share of BSNL rose between March 2017 and March 2019. During the period 53.64 lakh subscribers joined BSNL and 28.27 exited. The MTNL has 1.35 lakh subscriber exits and a mere 10,195 joining it. The numbers suggest that all the faults are not of the employees, as it is often alleged.

An analysis shows that the encouragement to private players started some of the BSNL woes. Though most of the private players were allowed to use BSNL and MTNL ports to start their operations, the two companies were never properly compensated for it. It was believed that the government-run organisations had the obligation to support the private companies.

This helped the private operators. But all of them tried to hit the government-run organisations’ business through unfair means. The two companies headed by bureaucrats were slow to take remedial actions. The employees alleged at different times that BSNL and MTNL were being weakened to help the private players.

The numbers suggest that all the faults are not of the employees, as it is often alleged. It is also true that BSNL and MTNL employees and their exchanges did not give proper service to the customers. The government also ignored it. Despite this, the companies were not in losses till 2010. But a decision to ask them to pay spectrum charges in all the circles they operated changed the dynamics. These started having losses.

It was a TRAI decision to create a “level-playing field”. It forgot that the BSNL and MTNL were created to give a service to the people and it had a heavy cost. The decision helped private companies rake in profits, while it was the BSNL with 20 telecom circles and MTNL too, were the telecom backbone not only in terms of voice services but also data transfer.

Four years later, the decision dumped the companies with huge losses. The Union Cabinet on January 9, 2014 decided to wave off spectrum charges and refund upfront charges of about Rs 14,000 crore - Rs 6,724.51 crore, MTNL will get back Rs 4,533.97 crore plus some more. Till date the amount has not been refunded. The objective of the decision was to provide financial support and create conditions for their smooth functioning.

Reviving the national backbone with accumulated losses, debts and interest payments is not easy. Apart from boosting the morale of the employees is a more difficult task. And it is often touted that the government is doling out the finances as aid. But it is not the case. It belonged to the company and a wrong decision pushed them to penury.

Indeed, there is need for a thorough probe. There are similarities in pushing the voice and digital backbone to losses and forcing the profit-making Air India and Indian Airlines to merge and be damned. In both sectors, the immediate beneficiaries were the private companies. In the case of Air India, it is now almost clear that it was part of a conspiracy. Suspicions are there for BSNL and MTNL too. A detailed investigation may lead to appropriate findings.

It is a wake-up call for the Narendra Modi government, which is striving to ensure probity and propriety in functioning of government undertakings. It ought to scrutinise many divestment programmes. Even the best private telco remains unstable. Some of their promoters are in heavy debt.

The government has, possibly realising the importance of government telcos, decided to revive the companies. The digital backbone has led the country to growth and now it yearns for support. The Modi government has taken the right decision. The results need a watch.----INFA

(Copyright, India News & Feature Alliance)