The Parliamentary Standing Committee on Communications and Information Technology has recommended the Department of Telecom (DoT) to carve out MTNL’s debt and assets worth over Rs 26,500 crore into a special purpose vehicle and then merge its operations with BSNL. It also recommended that BSNL should be allocated spectrum for rolling out 5G services in the country. Also Read - 6G network will be available by 2030, says Nokia CEO
According to a submission made by BSNL and MTNL Chairman and Managing Director P K Purwar, BSNL is expected to turn profitable by 2025-26, whereas, MTNL will not be able to survive. The outlook for MTNL is grim considering that it has a debt of over Rs 26,000 crore and revenues of only Rs 1,300 crore. Also Read - BSNL refreshes its Rs 2,399 annual prepaid plan with additional validity: Check details
The Parliamentary committee has recommended that DoT should consider various options including carving out the debt and assets like in Air India and merging operations with BSNL. BSNL and MTNL will come out with a viable proposal regarding the future of MTNL soon. Also Read - 5G will speed up news delivery, enhance user experience: Union Minister Anurag Thakur
“With Rs 26,000 crore debt, even if God comes to earth and tries to address its problems, the company cannot be revived. It is a fact of life; we have to accept it,” MTNL CMD told the panel.
The committee also added that the closure of MTNL will have a negative impact on the public sector banks.
To recall, both MTNL and BSNL were given a relief package of around Rs 70,000 crore in 2019, after which MTNL was expected to turn profitable by 2020-21 and BSNL by 2023-24. Despite the relief package and a revival plan, BSNL is set to report a projected net loss of Rs 5,986 crore for the year 2022-23, whereas, MTNL is projected to report a net loss of Rs 3,139.60 crore for the same time period. However, the company is reporting an operational profit.
The implementation of the revival plan did help with a salary bill reduction of around 50 percent at BSNL and 90 percent at MTNL.
DoT has informed the committee that the projected net loss of BSNL is due to the absence of 4G services, a decline in landline revenue, and the non-availability of funds for capital expenditure. The government has allocated an amount of Rs 44,720 crore to BSNL for implementation of various revival measures during 2022-23 and Rs 23,270 crore (inclusive of GST) for the cost of 4G spectrum.
The panel states that 4G services rollout will help BSNL in strengthening its foothold in the telecom sector and will also help in increasing its revenue earning.
“The committee also recommended that BSNL should also be allocated 5G spectrum in all the bands so that BSNL can roll out 5G services along with private telecom service providers. It is essential that BSNL is provided with a level playing field in rolling out 5G services and purchase of equipment like private telecom service providers,” the panel said.