DoT presents financial status of BSNL, MTNL before GoM

The GoM met for the first time since it was constituted after Sibal raised concerns over the future of the two loss-making PSUs

The Department of Telecom (DoT) today made a preliminary presentation on the present financial status of BSNL and MTNL to the Group of Ministers looking into the revival strategy of the state-owned telecom firms but no merger plan came up for discussion.

"The preliminary presentation has been made and the issues have been crystalised...Next time we (DoT) will make a detailed presentation on certain issues and then the GoM will take some decisions in principle on those issues," Telecom Minister Kapil Sibal told reporters here.

Asked about the merger plans between BSNL and MTNL, Sibal said: "We have not discussed (it) yet."

The GoM, headed by Finance Minister P Chidambaram, met for the first time since it was constituted after Sibal in a letter to Prime Minister Manmohan Singh raised concerns over the future of the two loss-making PSUs.

Sibal said the next meeting of the GoM is likely to be held soon.

The DoT in its presentation indicated that the cash reserves of the PSU firms depleted post the purchase of BWA and 3G spectrum at auction determined price in 2010.

Both the firms jointly shelled out Rs 29,598.35 crore for 3G and BWA airwaves. For 3G services, BSNL was asked to pay Rs 10,186.58 crore and MTNL Rs 6,564 crore. BWA spectrum jointly costed these firms Rs 12,847.77 crore.

"We have basically indicated how both MTNL as well as BSNL were obliged to purchase the BWA spectrum and of course paid for the 3G spectrum at the prices discovered in 2010," Sibal said.

MTNL reported widening of the net loss to Rs 5,321.12 crore for financial year 2012-13 compared to Rs 4,109.78 crore in FY'12. BSNL's losses are expected to be around Rs 8,198 crore for the last financial year.

DoT also shed light on legacy issues and how the firms have to discharge pension liabilities.

"...The pension liability of MTNL has to be discharged by the company whereas in the case of BSNL, the liability is discharged by government and of course the legacy issues, the result of all of which is that the company is not in very good shape as of now...Some immediate solutions are required," Sibal said.

High wage costs had been a major reason for these companies running in to losses. Overall, salary and pension expenses of MTNL employees form 103 per cent of revenues while for BSNL the same stands at 49 per cent.

The revival plan includes support of Rs 10,117 crore for retaining airwaves by BSNL and MTNL beyond the initial quantity that was allocated to them for mobile and other wireless services, and simultaneously refunding of money paid for BWA spectrum.

The members of GoM include Sibal who also dons the hat of Law Minister, Commerce and Industry Minister Anand Sharma, Planning Commission Deputy Chairman Montek Singh Ahluwalia, Information and Broadcasting Minister Manish Tewari and Minister of State in the Prime Minister's Office V Narayanasamy.