Merger of loss making MTNL with BSNL: Rajya Sabha Q&A

GOVERNMENT OF INDIA

MINISTRY OF  COMMUNICATION AND INFORMATION TECHNOLOGY

RAJYA SABHA

ANSWERED ON  18.07.2014

Will the Minister of COMMUNICATION AND INFORMATION TECHNOLOGY be pleased to satate:-

(a) whether it is a fact that both MTNL and BSNL are making losses;

(b) if so, the profit/loss status of these PSUs during the last three years;

(c) whether there is any proposal for merger of these two PSUs, if so, the details thereof;

(d) whether views of workers’ unions of these PSUs are also taken into consideration to obviate any financial loss to them; and

(e) whether the merger envisages profits to these companies?

** MTNL has shown a profit of Rs. 7825 crore mainly due to write back of provisions on account of pensionary liabilities and spectrum amortization costs after decisions of Government taken for revival of MTNL.

(c) to (e) Government is in the process of revival and revitalization of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) through various short term, medium term and long term measures.

The long-term measures, including merger of BSNL and MTNL, would attempt to position these PSUs to emerge as market leaders in the converged telecommunication market. For an in-depth study on the implications of merger of the two PSUs, three groups have been constituted to study issues of human resources integration, technology integration and corporate integration.

Views of unions on merger would be taken into consideration before a decision is taken in best public interest and that of two companies.

Another Similar Question Answer:-

QUESTION NO  63

Performance of BSNL and MTNL

63 SHRI D.P. TRIPATHI
Will the Minister of COMMUNICATION AND INFORMATION TECHNOLOGY be pleased to satate :-
(a) whether it is a fact that performance of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) is not upto the mark, if so, the details thereof; and

(b) the steps Government would take to improve the performance and infrastructure of both these public undertakings?

ANSWER

THE MINISTER OF COMMUNICATIONS AND INFORMATION TECHNOLOGY & LAW AND JUSTICE (SHRI RAVI SHANKAR PRASAD)

(a) to (b) A Statement is laid on the Table of the House.

STATEMENT TO BE LAID ON THE TABLE OF THE RAJYA SABHA IN RESPECT OF PARTS (a) TO (b) OF RAJYA SABHA STARRED QUESTION NO. 63 FOR 11TH JULY, 2014 REGARDING “PERFORMANCE OF BSNL AND MTNL”

(a) Government is conscious that the performance of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited needs substantial improvement.

Landline connections of BSNL have reduced by 38.04% in the period from March, 2009 to May, 2014 and landline connections of MTNL have reduced by 1.14% in the same period.

The market share of mobile subscriber base of BSNL has reduced from 14.87% in March, 2009 to 10.95% as on May, 2014. The market share of mobile subscriber base of MTNL in its two service areas, namely Mumbai and Delhi, has reduced from 10.87% to 4.83% in the same period.

The decline in landline connections and in market share of mobile subscriber base in BSNL has been sharp over the last five years whereas in MTNL, the decline in market share of mobile subscriber base over the last five years has been severe.

The revenues from operations of BSNL have reduced by 11.67% in the last five years, whereas in MTNL, it has reduced by 23.87% in the same period. BSNL has been incurring losses for the last five years with losses touching Rs 7085 crores in FY 2013-14. MTNL too has been incurring losses for four years with its losses reaching Rs 5321 crores in FY 2012-13. MTNL has shown a profit of Rs 7825 crore in FY 2013-14 mainly due to write back of provisions on account of pensionary liabilities and spectrum amortization costs after decisions of Government taken for revival of MTNL.

Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) are in financial distress. BSNL and MTNL are faced with declining revenues from loss of market share, increasing expenditure and inability to invest in expansion of communications network.

(b) Government has taken several measures to revive the two CPSUs. These measures include:

(i) Treatment of pensionary liabilities of Government employees absorbed in MTNL and who opted for combined service pension on parity with similar employees in BSNL.

(ii) Waiver of Government loan to BSNL involving an amount of Rs.1411 crores

(iii) Financial support of Rs.6724.51 Crores to BSNL and Rs.4533.97 crores to MTNL on surrender of Broadband Wireless Access (BWA) spectrum.

Besides these measures Government is formulating a coordinated plan aimed towards revival of BSNL and MTNL by addressing issues of high employee expenses and gainful utilization of assets to enhance availability of finances for network expansion and improvement in Quality of Service (QoS).

BSNL and MTNL are separately preparing a revival plan for increasing revenue potential, identifying business opportunities, organizational restructuring to enable them to grow into customer-centric companies with expertise in marketing and customer services delivery and developing human resources strategy in line with restructured organizational vision.