DoT draft note clubs 4G spectrum to BSNL and MTNL with VRS

Both the telcos did not receive 4G spectrum from the government to launch 4G services in the country. Talks regarding the allocation of 4G spectrum to both PSUs are going in full swing for a while now amidst talks regarding implementation of a voluntary retirement scheme for BSNL and MTNL

BSNL employees have been opposing the implementation of VRS scheme. The cabinet note includes the implementation of a voluntary retirement scheme at the two loss-making telecom PSUs. The department has sought comments from key ministries on the proposals, say reports.

BSNL, which is the only telco besides Jio adding subscribers on a regular basis, has, however, been handicapped by lack of 4G spectrum.

BSNL is among the two telecom companies that have been consistently gaining customers. All competitors of BSNL have 4G spectrum and invested heavily in building their network while the PSU has only 3G network which is denting the company’s profits. The telco even competes with private operators in terms of tariff plans.

Both the companies have also sought spectrum for 4G services through equity infusion from the government. BSNL, which has the lowest debt of Rs14,000 crore among all telecom operators, has sought 4G spectrum across India through equity infusion of Rs7,000 crore. The total spectrum will cost the firm Rs14,000 crore.

Digital Communications Commission, the apex decision-making body the DoT, had sought recommendations from the Telecom Regulatory Authority of India (Trai) on 4G spectrum allocation to BSNL and MTNL. Trai, however, has left it for the government to decide.

Both the telecom PSUs have high revenue-to-wage ratio due to a large number of transfers of employees by the DoT. BSNL has 1.76 lakh employees across India while MTNL has around 22,000 employees.

The revenue-to-wage ratio in the case of MTNL has swelled to 90 per cent while in the case of BSNL it is around 60-70 per cent.

Both state-run telecom firms have sought government permission for a Gujarat model a voluntary retirement scheme under which employees are offered an amount equivalent to 35 days of salary for each completed year of service, and 25 days of salary for each year of service left till retirement. 

The VRS scheme for BSNL and MTNL will have a revenue impact of Rs 6,365 crore and Rs 2,120 crore respectively.

The DoT has recommended that VRS of both PSUs should be funded through a 10-year bond issue and the bonds should be paid back by lease revenue that they will get from land asset monetisation.

Implementation of VRS is expected to lower the expenses of the firms and give them liquidity. BSNL employees associations have opposed the move of implementing VRS alleging that the whole idea of government in implementing the scheme in BSNL is to cut down the size of the workforce to make it attractive for privatisation.

The union said that VRS had been implemented twice in MTNL and still the company is a deep crisis. BSNL Employees Union, National Federation of Telecom Employees (BSNL), All India BSNL Executives Association, BSNL Mazdoor Sangh, BSNL Association of Telecom Mechanics, BSNL Officers Association etc covering almost all workforce of BSNL will hold protest demonstrations across the country on Thursday to oppose implementation of VRS.