BSNL, MTNL plan VRS to turn ailing business around

BSNL, MTNL plan VRS to turn ailing business around
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New Delhi, Apr 5: State-run ailing telecom companies — BSNL and MTNL — are seeking early retirement and VRS packages for staff as they work on revival plans to cut down on flab and move towards profitability. Top functionaries of the two telecom companies met officials at the Prime Minister’s Office, where officials from the department of telecommunications (DoT) were also present, and discussed turnaround strategies for the two companies.
This includes a VRS for BSNL staff, though there is no proposal for a compulsory handshake, officials said. Also discussed was a reduction in retirement age from 60 years to 58 years, and provision of 4G spectrum to the two companies. The VRS offer, if accepted by those above the age of 50 years, may see the exit of around 54,000 staff or nearly 30% of BSNL’s total strength of around 1.76 lakh employees.
“The offer will only be voluntary in nature and there is no proposal at all to make it a compulsory handshake,” a senior BSNL official said, requesting anonymity.
While BSNL had a loss of around Rs 8,000 crore in 2017-18 on revenues of Rs 27,818 crore, the loss for MTNL — which has a staff strength of 22,000 — was Rs 3,000 crore in the same period on revenue of Rs 2,372 crore. DoT will move a Cabinet note in the next few days regarding the VRS option. For this, it will seek an approval from the Election Commission since the Model Code of Conduct is in place ahead of the Lok Sabha elections, a government official said.
DoT plans to fund the VRS through issuance of 10-year bonds. The bonds would be paid back by lease revenue that they will get from land asset monetisation.
Staff salaries are a big drain on the operations of the two telcos which are already battling the competitive heat, following the aggressive posturing unleashed after the launch of services by Reliance Jio. The wage-to-revenue ratio in case of MTNL has swelled to 90%, while in the case of BSNL it is 65-70%, officials said. Both telecom firms have requested the government to grant VRS for employees based on the Gujarat model.
Under this scheme, 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 is offered.