DoT worried over Pitroda panel suggestions on BSNL

The Department of Telecommunications (DoT) has raised serious concern over suggestions made by the Sam Pitroda committee for sweeping changes in state-owned Bharat Sanchar Nigam Ltd (BSNL). The recommendations include divestment of 30 per cent government equity in BSNL, reducing the company’s workforce by a third, and cancelling the telecom equipment order for 93 million GSM lines, replacing it with network outsourcing deals.

It is learnt that Communications and IT Minister A Raja is likely to write a letter to the Prime Minister’s office (PMO) expressing his displeasure over the report.

“The report by Pitroda offers a long-term solution… it does not address the existing issues and the concerns that may arise while following the long-term plan,” a top functionary in the ministry told Business Standard. If BSNL shifts to an outsourcing model for procuring equipment, as suggested by the report, it would take 8-10 months and, all this while, it would not be able to add capacity. This would further push the company down in the Indian mobile market.

The recommendations, however, were approved by the BSNL board yesterday. These have to be cleared by the Telecom Commission, and, considering the strong opposition, it is highly unlikely to go through.

The committee, formed by PMO to look at ways of reviving BSNL, also had Telecom Secretary P J Thomas and HDFC Chairman Deepak Parekh as members.

Asked why the ministry was raising objections when the telecom secretary himself was part of the committee, the official said he (telecom secretary) was not involved while preparing the report on BSNL. The functionary said the committee had not undertaken any groundwork to learn about the functioning of BSNL and the unions. It also suggested changes without even analysing the consequences of the suggestions.

When asked how the voluntary retirement scheme (VRS) would be financed, the DoT functionary added: “The finance ministry is not ready to provide support to a VRS scheme of BSNL. We are working out the numbers as to how much it will cost. If money does not come from the finance ministry as a special package, we cannot implement the scheme at all.”

The functionary also made it clear that the proposals, though cleared by the BSNL board, would be difficult to implement without the support of the unions. “The unions were not consulted on VRS or the divestment. We don’t see how they can be implemented without their support.”

The unions have been opposing the company’s proposed initial public offer since it was approved in 2007.