Memoranda for Submission to the Chief Ministers of the Two Telugu States.


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 “