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BSNL union seeks PM support on land monetisation plan

Rajesh Kurup Mumbai | Updated on September 24, 2019 Published on September 24, 2019

The PMO had rejected the proposal earlier

The Sanchar Nigam Executives’ Association (SNEA), an employees’ union of Bharat Sanchar Nigam Ltd (BSNL), has sought Prime Minister Narendra Modi’s intervention to reconsider a proposal to set up a Special Purpose Vehicle (SPV) for the ailing PSU’s land monetisation plans.

This, along with the merger with Mahanagar Telephone Nigam Ltd (MTNL), was earlier rejected by the Prime Minister’s Office (PMO).

Separately, BSNL, which had paid August salary after an 18 days’ lag, might be staring at a salary default for September. This is because the company is unable to generate enough funds from internal accruals to pay wages, a source close to the development said.

“Formation of an SPV is necessary for taking over bank loans of BSNL and making it a debt-free company. This proposal has the potential to generate additional revenue for meeting the future expenses, only if an SPV is formed,” said a letter addressed to the Prime Minister, a copy of which was reviewed by BusinessLine.

Financial assistance

This is one of the two important decisions — the other being financial assistance from the government to maintain loss-making rural exchanges — that could revive BSNL’s fortunes, said the letter dated September 23.

Apart from the union, the Department of Telecommunications (DoT) is also keen on setting up the SPV.

The employees’ union and DoT officials met various ministries and departments asking them to reconsider the earlier decision to scrap the SPV proposal, sources close to the development said.

“We want the move to be reconsidered as setting up an SPV is essential for BSNL’s land monetisation initiatives. This is will also enable the operator concentrate on its core competencies (telecom services) and let the SPV handle the land issues,” said one of the sources.

“A memo is being prepared based on the minutes of the earlier Group of Ministers (GoM) meeting, where the SPV move was supported,” the source said, adding DoT Secretary had sought PK Sinha’s (former cabinet Secretary who has been appointed as Prime Minister’s principal adviser) intervention in the issue.

Sinha was involved in the earlier GoM, PMO and Cabinet Secretary level talks to revive the company. BSNL has also sought reconsideration of the decision by PMO to scrap the request to provide financial assistance to maintain rural exchanges.

“BSNL is providing telecom services to rural and remote parts of the country and maintaining 17,000-18,000 exchanges, incurring ₹3,000-4,000 crore losses every year, otherwise these villages will be cut off,” it said.

In August, the PMO rejected a proposal to set up an SPV for monetisation of land and transfer BSNL’s ₹23,000-crore loan and an equivalent land parcel to it.

Impact on revenue

SNEA also moved BSNL Chairman and Managing Director PK Purwar stating that non-payment of contract labour charges for the last 6-7 months are seriously affecting the landline and leased circuit maintenance and provisioning of new connections.

“It appears that management is deliberately doing this when vendor payments are happening on the other side. Hundreds of landlines are closing every day due to faults which will have serious impact on the revenue in two to three months,” said the letter signed by Sebastin K, SNEA General Secretary.

 

BSNL’S land assets at prime locations itself will be valued at over Rs 3-lakh crore, it added.

The sharp decline in revenue in last three years - from Rs 31,532 crore in 2016-17 to Rs 19,308 crore in 2018-19 - is not because of the number of employees, but due to the predatory pricing by another operator, Reliance Jio Infocomm, the letter to the Prime Minister alleged.

Government interference, non allotment of 4G spectrum, non-appointment of BSNL Board of Directors and poor investment/bad management decisions are other major reasons for the decline in revenue, it added.

The revenue for other operators also came down by 40-45 per cent during this period. Aircel, Reliance Infocom, Tata Teleservices and Telenor, among others, were forced to shut down their services and Vodafone and Idea compelled to merge, it said, adding, all the three private operators are having huge liability.

Published on September 24, 2019
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