State-owned telecom companies BSNL and MTNL turned EBITDA positive in the first half of financial year 2020-21, demonstrating a marked improvement in performance within a year of approval of their revival plan, the Communications Ministry said on Monday.
While EBITDA of Bharat Sanchar Nigam Ltd (BSNL) rose to Rs 602 crore during the first half of 2020-2021, that of MTNL stood at Rs 276 crore, it said in a release.
Both organisations expect to reduce their losses by 50 per cent when compared to 2019-20, it said.
In so far as 4G services are concerned, the Department of Telecom (DoT) has made its position clear that core network for 4G will be "totally made in India".
"Now within a year of revival plan, the state-owned undertakings Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) have turned EBITDA positive in first six months of this financial year," the release said.
Put simply, Earnings before Interest, Taxes, Depreciation and Amortisation or EBITDA is a measure of a company's operational performance.
BSNL is once again back on the track of profitability, it added.
The improvement in performance came on the back of a sharp reduction in wage bill due to Voluntary Retirement Scheme (VRS) under which nearly 50 per cent workforce of BSNL and 75 per cent workforce of MTNL was reduced.
Further, BSNL was able to maintain its revenue and cut down on other costs.
BSNL is also rapidly expanding its Fiber-To-The Home (FTTH) connections and the progress is being closely monitored by DoT.
"In the mobile segment, market share has increased to 10.36 per cent in October, 2020 as per figures published by TRAI. BSNL added over 10 million new customers during this financial year in mobile segment.
"This has also given fillip to government's Digital India drive of cashless transactions as online transactions increased by over 43 per cent in December, 2020 since last financial year," the release added.
The government had approved the revival package for BSNL and MTNL in October 2019 which included VRS, support for 4G spectrum, monetisation of core and non-core assets, sovereign guarantee for bonds to be raised by the public sector undertakings (PSUs), and merger of MTNL and BSNL in the short run.
"BSNL and MTNL have very successfully raised money from the bond route. In the recent bond offer of MTNL, the issue was subscribed more than 3 times and for BSNL more than 2 times," it said.
MTNL and BSNL have been able to monetise core and non-core assets totalling Rs 1,830 crore in 2019-20, and the number is expected to be in excess of Rs 3,000 crore in the current year.
As many as six properties are expected to be approved for auction through DIPAM route, it pointed out.
"BSNL is monetising its tower assets by leasing out its towers. It earned Rs 1,018 crore in the previous year and has planned to securitise the earnings from tower rentals.
"BSNL towers have unique preposition of fiber connection in more than 70 per cent which make them highly attractive for telecom service providers," it added.
Earlier on Monday, in a release summing up the developments in the sector as part of yearly review for 2020, the DoT had said the process for spectrum allocation for 4G services to BSNL on pan-India basis, including Delhi and Mumbai, has been initiated and funds have been provisioned in FY2020-21.
It said that overall 92,956 employees of both the PSUs who opted for VRS have retired on January 31, 2020.
"The salary expenditure in BSNL and MTNL has reduced by around 50 per cent (about Rs 600 crore per month) and 75 per cent (about Rs 140 crore per month), respectively. EBIDTA has become positive in first half of FY2020-21 in both BSNL and MTNL," it said.
Further, sovereign guarantee of Rs 15,000 crore has been extended to BSNL/MTNL. They have raised funds from market to restructure existing high-cost debt, the DoT release said.