Articles
What should be done with BSNL & MTNL
Dt: 2/4/19
What should be done with BSNL & MTNL
Dr T.H.Chowdary*
The BSNL and MTNL the Central government- owned telephone companies could not pay salaries for February 2019. GOI had to release funds so that the employees could be paid, late in March 2019. The GOI requested state governments to tell their Discoms not to cut off power to the telephone exchanges and offices for not paying electricity bills. Can there be a more humiliating state for these companies? The combined losses of these companies are about Rs. 25,000 crores! The companies are asking government to give them package of relief to keep them alive.
2. That no government company which was born out of past monopoly can face competition was being argued by me since the 1980s . I have been suggesting ( while still in the DOT) that the government’s monopoly in telecoms should end, the services should be corporatized and eventually disinvested and sold away . Neither the staff unions nor the engineer -bureaucrats in the Telecom Board or Telecom Commission ever agreed to renounce their overlordship as government officers for none of them would be held responsible for the decline and decay of the PSUs – MTNL and BSNL. Let us skip the blame apportionment and consider what should be done.
3. First, state ownership and ministerial overlordship and the inheritance of huge number of unionized employees and business-ignorant engineers labeled as Chairman and Managing Director, disable BSNL/MTNL from competing with private Telcos in a hyper-competitive market. Ministers use PSUs for partisan interests, often milking them in unimpeachable ways (eg: Maran’s private telephone exchanges; 2G spectrum; delaying acquisition of expansion equipment thereby leaving the market for private Telecom etc)
4. Secondly, there is no need for government to own a telephone company when there are several hyper-competitive P-Telcos. The world’s super power, USA does not have a government-owned Telco. If security is feared governments can build secure systems by hiring transmission capacity from the P-Telcos. Neither the irretrievably loss -making Air India nor BSNL/MTNL are needed by government when services they offer can be had less expensively from their competitors.
5. Third, BSNL should be broken up into state/region-wise companies, with one non-operating holding company for all of them. The state/region wise companies should be totally disinvested. P-Telcos will buy some of them. The sale proceeds may be used to pay off the employees in a judicious manner. The sites where the telecom installation are, have an enormous real estate value.
6. Fourth: There will be few takers for the BSNL’s units in the north-East, Bihar and J&K. As service deteriorates, subscribers will switch over to P-Telcos. The BSNL may continue to operate such units as cannot be sold. The employees there may continue to be paid such outgo and losses may be much less than what they are now.
7. Finally, let us recall what the late Sri Vasant Sathe, a senior Congressman and a one time communications minister had said about PSUs like BSNL,MTNL,Air India.
“Academicians have attributed several additional strengths to the public sector. They primarily are:
Ability to survive without profit
State ownership gives them immortality
Wages and high bonuses can be paid over and over again
by continuously incurring losses
Government ownership gives full benefit of a monopoly”
- Vasant Sathe , former Communications Minister
Government of India in his book,
“Restructuring of Public Sector in India “
(555,words)
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