MTNL wants govt to pay its pension liability

You are doing it for BSNL, it notes.

Concerned over falling revenues and profitability, state-run telecom company MTNL has asked the government to pay pension to the company’s retired employees in a bid to cut down wage costs.

“We have written to the Department of Telecommunications (DoT) saying that pension to our employees should be paid by the government, as in the case of BSNL. Both MTNL and BSNL are government-owned. If government is paying for BSNL, why not for MTNL?” Chairman and Managing Director R S P Sinha said.

The PSU has undertaken three rounds of VRS to cut excessive workforce but is unable to get any benefit out of the trimmed workforce, as the pension is being paid by MTNL itself. In addition to this, the Sixth Pay Commission has put extra burden on the wage and salary bill.

MTNL, which is consistently seeing its bottom line and top line under pressure due to severe competition from bigger rivals on the mobile front, feels high wage and salary costs can be checked if government approves its demand for parity with BSNL on the pension liability front.

Sinha said the company’s wage bill rose by Rs 600 crore to around Rs 2,200 crore in FY09, primarily due to the pensions paid out on a turnover of Rs 5,000 crore.

In FY09, 48 per cent of MTNL revenues were used to pay wages and salaries.

In Q2 ended September 2009, MTNL net profit went down to Rs 20.5 crore against Rs 91.4 crore in the same quarter last financial year. Net income from operations slipped to Rs 955 crore from Rs 1,201 crore.