Articles
Revival of SBNL and MTNL
Dt: 5/4/19
Revival of SBNL and MTNL
Dr T H Chowdary*
News that there was a meeting of the chiefs of the BSNL and MTNL with an officer in the PMO and that in this meeting NITI AYOG persons were also present had been published in several papers recently. That the BSNL and MTNL had defaulted on the payment of salaries to their employees in Feb 2019 and that the Government of India had requested the state governments to prevail upon the DISCOMS not to disconnect electrical power to the telephone exchanges of these two companies had also hit headlines in several news papers. That both the companies are having too many employees and that their wage bills are very high has also received extensive publication. These two companies have been losing a few thousand crores of rupees every year and the debt of BSNL alone is Rs. 14,000 cr . The question is: is it necessary that the government of India should have state -owned telephone companies to provide its communication services to it. And whether these companies should be kept alive even as they incur increasing losses year after year and public money is poured into these companies to keep them alive.
2. There is hyper -competition in the provision of various telecom & information services in our country, as in no other country. The entry of R-Jio into the market has disrupted the telecom services eco system in the country. R-Jio can have immense amount of capital at least cost from Reliance Industries, its mother /associated company. No private or government company has such an abundant and inexhaustible financial resource to back it up. Once very profitable and healthy companies like Bharati Airtel, VodaFone are in financial distress. Smaller companies like Aircell have evaporated and Idea had to merge with Vodafone. When such private companies themselves are having such turbulent existence and yet services are becoming available at ever cheaper rates it is the rational to keep a sinking government owned company burdened with huge staff who cannot be given any work; it does not seem
to be wise. There are drivers drawing more than Rs.40,000 per month and sitting idle as there are no vehicles ; there are several scores of General Managers, Principal General Managers, Chief General Managers and so on with enviable salaries but little work. Of course, it is not the fault of the staff. Since the 1980s itself was becoming evident from the changes happening in all countries where government telecom departments were getting corporatized, privatized and getting subjected to competition, India could not avoid this development . Sage counsels from within and outside the department did not impress and move the senior officers including members of the Telecom Board and Telecom Commission from seeing the writing on the wall namely government companies cannot compete with privet telephone companies. Every step towards liberalization, corporatization and competition was fiercely opposed by the Marxist communist ideology -fed employee unions and the senior government officers who had been finding it comfortable to be government officers with all the privilege of non-accountability for either performance or for financial viability .
3. Without going into the sordid sorry history of continuous opposition to reforms, let us consider what should be done . The BSNL and MTNL have got extraordinarily valuable sites and buildings in all cities and towns. Their market value will run into trillions of rupees. Once large spaces and huge buildings were required for the old type of technology . But with ICTs becoming the basis of every variety of communication service, these buildings and sites are not necessary. Many of them could be sold and a huge amount of money realized.
· The BSNL should be broken into state -wise corporations with a holding company at the top. Some of the statewide companies could be quite attractive to be purchased by private telephone companies. And therefore they should be disinvested as fast as possible, in every manner feasible. A few companies in the north-east, Bihar and J&K may find no buyers . With deteriorating service, their subscribers would very rapidly shift to private telephone companies. Then these companies will be simple shells without substance. The employees may be paid off from the proceeds of the sale of the real estate.
4. It is sad to note that there never has been vision or dynamism in the management of the BSNL& MTNL. This is in contrast to the Videsh Sancahr Nigam Ltd which was also a state- owned corporation. Its management saw the writing on the wall and facilitated its privatization. If only BSNL and MTNL’s the managers had the vision like that of the VSNL, the sorry state of seeking sops from government for survival and for payment of wages and electricity bills would not have come.
5. Giving them 4G spectrum now while 5G services from P-Telcos are imminent is unwise –funding vitality companies with old technology while rivals are two generations a ahead .
6. If the government has any misgiving about security of its communications if there are not state owned companies, such a belief is absolutely unwarranted. World’s super power, USA has no state -owned telephone corporation. It does not find its security threatened . It is possible that a private dedicated network for either the state governments or the union government can be had by leasing transmission capacity all over the country and building dedicated networks with designated points of interconnection with the public networks with enough security built it for access.
7. Finally, it is very undesirable and wrong to infuse precious public money into the debts-ridden, vitality-lacking state owned companies BSNL and MNTL. It is wrong and immoral and financially disastrous to keep overaged, sickly men or companies alive. Infusion of capital or waiver of debt will be a costly, populist, gamble and should be avoided. It is pertinent to recall the late Sri Vasant Sathe’s words about PSUs. He wrote:
“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 “
(1049 words)
END