PM Clears Ministers' Committee to Study BSNL, MTNL Revival

 

Monday, 22 April 2013

Prime Minister Manmohan Singh has approved the constitution of a group of ministers (GoM) to look into reviving the ailing telecom PSUs — BSNL and MTNL. The GoM, which is expected to "consider and recommend measures that could be taken in the short, medium and long term for revival and revitalization of BSNL and MTNL”, will submit its recommendations in three months. The panel will include finance minister P Chidambaram, telecom minister Kapil Sibal, commerce minister Anand Sharma, law minister Ashwani Kumar, planning commission deputy chairman Montek Singh Ahluwalia, I&B minister Manish Tiwari and minister of state for PMO V Narayanaswamy. The department of telecom (DoT) has been asked to send agenda papers and minutes of the GoM meeting to the PMO at the earliest. Earlier this month, Sibal had written to the prime minister urging him to set up a GoM to rescue the state-owned telecom players from financial distress. "Unless immediate steps are taken to revive and revitalize these PSUs, they would turn sick very shortly," Sibal wrote. Sibal had also said that he expects BSNL to make losses of around R10, 000 crore in 2012-13, while MTNL's net worth is likely to get completely eroded. BSNL, which offers services in all regions except Mumbai and Delhi, registered a loss of R8, 851 crore in 2011-12 and MTNL registered a loss of about R4, 110 during the same period. Financial results for 2012-13 have not been declared by the companies. Sibal in his letter to the PM had also noted that despite implementing various recommendations of the Sam Pitroda Committee, set up in 2010 to suggest a path for positioning BSNL and MTNL for better delivery of services, the troubled telcos could not be helped as the environment had changed significantly since then. In a recent presentation to Sibal, both BSNL and MTNL had stated that they will not see any turnaround this fiscal. BSNL, in its presentation, had said estimates indicate that its revenues for the year-ended March 2013 would be around R25, 384 crore, down 9% from R27, 944 crore during 2011-12. MTNL, which operates in Delhi and Mumbai, revealed that its losses for the first six months of this fiscal (2012-13) increased to R2, 153 crore, up 26% compared to a loss R1, 714 crore for the six months ended September 2011. While BSNL caters to about 14.82% of the total mobile users in India, MTNL has a market share of 0.76%. However, both the companies have dominant share in the fixed-line segment, which is not growing anymore. Tough call -BSNL expected to make losses of around R10, 000 crore in 2012-13, while MTNL's net worth is likely to get completely eroded -BSNL says revenues for the FY13 will be around R25, 384 crore, down 9% from R27, 944 crore during 2011-12 - MTNL says losses for the first six months of FY13 rose to R2, 153 crore compared with a loss of R1, 714 crore for the six months ended Sept 2011.  – The Financial Express