Holding Firm Structure For Dot Proposed
The Union government is planning to corporatise the department of telecommunications (DoT) and is planning to plump for a holding company-subsidiaries structure as part of its restructuring programme of the department. Communications minister Beni Prasad Verma said here yesterday that the programme would follow the corporatisation plan of the Mahanagar Telephone Nigam Ltd (MTNL).
Telecom secretary A V Gokak did not set a time schedule for the corporatisation programme, but other DoT officials predicted that the exercise would start within two years, barring lack of political will. Although the final sequence of the restructuring process has not been finalised, sources say the corporatisation would transfer DoTs assets to the proposed operating companies, which would be fully owned by the holding company.
This is the first time that the DoT brass has officially expressed its intentions to corporatise the department. Former telecom secretary R K Takkar had, last year, said that the ultimate goal of the restructuring programme would be privatisation of the corporatised DoT. Officials here, however, did not want to comment on this aspect of the restructuring programme.
The final structure of the corporation has not been decided yet. This is being held up because a final decision on the exact function of each of the operating companies has not been finalised. For instance, an earlier proposal that the country adopt four regional operating companies as suggested by the Athreya Committee which looked into reform of the telecom system in the country in 1990 is facing hurdles because of expansion in rural and other non-lucrative markets.
We have not finalised the structure precisely because of this problem. For example, if there is an operating company in the east, which will include the north-east region, this will obviously not make profits. Who will pay for development in the region then? a DoT official queried.
The Athreya Committee had suggested that DoT including networks of Delhi and Bombay, which fall under MTNL should be restructured into six corporations: India Telecom Operating Corporation as holding company; four Zonal Telecom Operating Corporations with headquarters at Delhi, Bombay, Calcutta and Madras and one Long-distance Service Corporation.
Last year, the DoT topbrass had proposed that the department be split up into three entities: an operating arm, called India Telecom; a regulator and a policy-making arm.
The regulator has already been established with the assumption of office of the Telecom Regulatory Authority of India (TRAI). Government officials feel that India Telecom will be the initial corporatised version of the DoT.
Besides the Athreya committee, two other committees have worked on the proposed restructuring of DoT.
The present recast of DoT comprising India Telecom, TRAI and the policy-making Telecom Commission which is to be a part of the ministry of communications is based on the recommendations of the D K Gupta Committee report submitted in 1994.
The Khan Committee chaired by the present member, production, Telecom Commission was bold in its views and suggested the privatisation of DoT on the lines of the partial float of British Telecom in 1984 which later was converted into a fully private company. The Committee had suggested a holding company headquartered in Delhi; a long-distance corporation; a metro corporation encompassing the four metro cities of Delhi, Bombay, Calcutta and Madras.
Besides these, an India Telecom North Corporation, managing the telecom networks in J&K, Himachal Pradesh, Punjab, Haryana, Rajasthan, Madhya Pradesh, Uttar Pradesh (east and west), Bihar, West Bengal, Orissa, Assam, North East and Gujarat; India Telecom South for Maharashtra, Andhra Pradesh, Tamil Nadu, Kerala and Karnataka were suggested. It also recommended splitting of the Telecom Commission into two parts: one to function as the management board of the holding company and the other to function under the ministry of communications for policy formulations.
The department of telecommunications (DoT) is studying the suggestion of the Divestment Commission to offload 10 per cent of its stake in MTNL. The commission had suggested the government offload the stake. Minister Verma expects four of the basic telecom letter of intent (LOI) holders to sign licence and interconnect agreements soon.