Telecom panel hesitates on Pitroda dose for BSNL

An attempt is to be made over the next month to get over the opposition of staff unions to the Pitroda Committee recommendations on the revamp of Bharat Sanchar Nigam Ltd (BSNL), the state telecom network outside Mumbai and Delhi.

The Telecom Commission, the highest decision-making body of the Department of Telecommunications (DoT), discussed the issue for an hour today and decided to have an internal committee try for a consensus on the subject with the unions within a month. The Commission will then decide what to do, a senior DoT official told Business Standard.

Sam Pitroda is the Prime Minister’s official advisor on infrastructure and innovation. This January, he was asked to chair a committee to recommend what to do with BSNL, which is losing market share to private competition. The report was given in February.

Key recommendations include divesting of at least 30 per cent of the government stake, induction of the chairman and other senior officials from the private sector and offering retirement to a third of the 320,000 employees. 

The unions have strongly opposed all these. Nevertheless, the BSNL board gave an in-principle approval in March, noting higher government approval was needed. The DoT officials said further deliberation was needed, as the recommendations involve changing various aspects in BSNL functioning.

BSNL will be making losses in 2009-10 for the first time in its history. For the nine months ended December, it made a profit of merely Rs 175 crore, but had to pay about Rs 3,500 crore as arrears of pay. Its market share is down to a mere 12 per cent. 

In April, an internal note of DoT had said the proposed divestment of 30 per cent of equity shareholding in phases should wait till BSNL had been revamped. “In accordance with the recommendations of the Pitroda Committee, it is proposed to wait for the fundamental changes to be implemented in an effective manner, leading to building of the company’s image and enhancement of enterprise value before implementation of the disinvestment proposal,” DoT had said in a note to the Telecom Commission.

Some suggestions were accepted earlier by the BSNL board. Pitroda said an existing 93-million-line order, which had run into all sorts of road blocks, should be scrapped. And, that the management opt for outsourcing of network management, as competing private sector telecom companies do. BSNL’s board cancelled the said contract and okayed the downsizing and divestment recommendations.

All these drew fire from the unions. They had been successful earlier in derailing BSNL’s plans to go in for a stake dilution of 10 per cent through a public offer of equity, despite the Cabinet approving this two years earlier. Their opposition made the government shelve the proposal.