Tale of 2 PSUs: It's at least an 18-month wait before BSNL, MTNL are merged

HR and other issues need to be sorted out by the panel that will decide the fate of the two PSUs

Mahanagar Telephone Nigam (MTNL) will have to wait for at least 18 months to become a part of Bharat Sanchar Nigam (BSNL) as a joint panel will decide the fate of the two PSUs, post merger.

The joint committee will have representatives from both the companies and the department of telecommunications (DoT). It will deliberate on the outstanding human resource issues of the two sick public sector units, it is learnt.

“The pay scales of both the companies are very different and have to be brought on a par for a smoother transition process,” a person in the know told Business Standard.

The pay scale of MTNL is lower than that of BSNL and therefore some parity needs to be brought in. Otherwise, it will have HR issues in the future.

The central government, which holds 56.89 per cent in MTNL, will also buy back shares of the company before de-listing the entity, the official said.

Since MTNL is a listed firm and BSNL is unlisted, synergies can be brought in the merged entity only when these issues are ironed out. Subsuming MTNL with BSNL is part of the larger revival package for the two companies.

To expedite the revival of BSNL and MTNL, a group of ministers, headed by home minister Amit Shah, has been constituted. In its first meeting last week, Shah took stock of the current situation pertaining to the future of these two companies.

Several revival measures and plans were discussed in the meeting, including merging the two companies.

Both BSNL and MTNL had sought relief from the central government in the form of financial stimulus to survive the competitive telecom space.

The proposed package for BSNL includes a voluntary retirement scheme of Rs 6,365 crore and equity infusion of Rs 6,767 crore for allotment of 4G spectrum.

About half of the 176,000 employees at BSNL are estimated to retire in the next five-six years. If only about 50 per cent of eligible employees (those about 50 years) opt for VRS that would be 40,000 people.

For MTNL, the VRS package could have a revenue impact of Rs 2,120 crore. The company has 22,000 employees. Of this, 16,000 employees with retire in the next five-six years.

The Centre’s financial support to the PSUs has risen in the current financial year as it prepares a revival package to de-stress these debt-laden entities.

While overall budgetary allocation for telecom PSUs has gone down by 15 per cent, the one for BSNL and MTNL has gone up for the current fiscal (2019-20).

Total investment in the six telecom PSUs for the current year is Rs 14,025.90 crore against an allocation of Rs 16,468.39 crore in the revised estimates, last financial year (2018-19). The same was Rs 12,186.9 crore in 2017-18.

The rise in allocation for BSNL and MTNL can be seen as a step towards reviving the two companies, which are grappling with financial stress.

A Rs 6,725 crore fundraising exercise has been planned for BSNL and for MTNL a sum of Rs 498.26 crore may be raised.

The proceeds of the fundraising will be used for the benefit of MTNL and BSNL employees.

IT & telecom minister Ravi Shankar Prasad, in his first press conference after assuming charge, had said that the government will revive BSNL and MTNL.