DoT may put Pitroda Panel report in cold storage

Key proposals not feasible for BSNL, says telecom official.

Iimplementation of the Pitroda committee report on the restructuring of state-run telecom company Bharat Sanchar Nigam Ltd (BSNL) seems to be a closed chapter. After 10 months of deliberation, the government has decided to keep aside the key recommendations due to the ailing financial health of BSNL and stiff opposition from its employees.

“The Pitroda report is unlikely to be implemented, as several of its key proposals are not feasible for BSNL in the current environment,” a senior official from the telecom ministry told Business Standard.

This was decided at a recent meeting of the full Telecom Commission, which has members from telecom, finance, disinvestment and other ministries. The Telecom Commission is the highest policy making body of the Department of Telecommunications (DoT).

BSNL posted loss for the first time in 2009-10 and this makes the 30 per cent disinvestment proposal unacceptable. Also, laying off 100,000 employees through a voluntary retirement scheme is not possible, due to stiff opposition from the employee unions. The company has 300,000 employees across the country. BSNL, on its own, had started a restructuring exercise in 2009, even before the Pitroda committee recommended it in February, the official said.

Earlier, DoT had set up an internal committee to look at the Pitroda report. But the internal panel said BSNL should wait for two years and improve its performance before going for an initial public offer to get the right valuation.

The committee felt bringing in senior officials from the private sector will have repercussions on all public sector units. However, a selection committee was formed for finding suitable candidates for the posts of chairman and managing director of BSNL and Mahaganar Telephone Nigam Ltd.

The panel, however, partially agreed with the Pitroda committee's recommendations that BSNL share its infrastructure with private companies to improve its revenue streams, launch a venture fund with its 30,000-crore cash surplus and also hive off its land bank into a separate company and monetise it.

All these exercises have been started by BSNL.

BSNL has been losing market share and subscribers. For the first time since its inception, BSNL posted a loss of over Rs 1,800 crore for 2009-10 due to increased competition and declining market share. The Prime Minister’s Office had constituted the Pitroda committee to suggest how to improve the performance.