The Union Cabinet had approved the revival package for BSNL/ MTNL in October 2019
BSNL’s growth in income and ability to contain expenditure in salary, administrative, employee remuneration and other benefits, helped in growing EBITDA to Rs 3,855 crore in 2015-16 from Rs 672 crore in 2014-15, under Union Minister Ravi Shankar Prasad, and now after few “troubled” years and a revival package, BSNL is once again back on the track of profitability, according to an official release.
“We are going to revive BSNL and make it profitable,” Mr Prasad had told the Lower House during the Question Hour in November 2019.
Now within a year of the revival plan, the state-owned undertakings Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have turned EBITDA (earnings before interest, taxes, depreciation, and amortization) positive in the first six months of this financial year.
While for BSNL, EBITDA rose from minus Rs. 3,596 crore for the half-year ended in September 2019 to positive Rs. 602 crore, for MTNL the corresponding figures were minus Rs. 549 crore in September 2019, and the current figure, positive Rs. 276 crore. According to the Department of Telecommunications (DoT) sources, both organizations are expected to reduce their losses by 50 per cent when compared to 2019-20.
The reasons for better performance include a sharp reduction in wage bill due to the voluntary retirement scheme (VRS) (nearly 50 per cent workforce of BSNL and 75 per cent of MTNL was reduced).
Equally important, 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, the 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 the mobile segment. This has also given a fillip to the government’s Digital India drive of cashless transactions as online transactions have increased by over 43 per cent in December 2020 since the last financial year.
It will be recalled that the Union Cabinet had approved the revival package for BSNL/ MTNL in October 2019 which, inter-alia, included VRS, support for 4G spectrum, monetization of core and non-core assets, Sovereign Guarantee for Bonds to be raised by the PSUs and merger of MTNL and BSNL in the short run.
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 securitize the earnings from tower rentals. BSNL towers have a unique preposition of a fiber connection in more than 70 per cent which makes them highly attractive for TSP. Fiber has been monetised by leasing it out to private TSPs and BBNL. It has leased out 2 lakh kilometers of OFC at the rate of Rs 18000 per Km. per year, earning a revenue of Rs. 360 crore.