BSNL-MTNL merger part of the revival plan, says the Government with an eye on polls

In order to revive the two ailing state-owned companies and with an eye on state elections including Delhi, the Union Cabinet on Wednesday, October 23, approved the merger of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).

As part of the revival plan, MTNL will be merged with BSNL, pending which MTNL will act as a subsidiary of BSNL. Announcing the merger, Union Telecom Minister Ravi Shankar Prasad said the government will put in ₹29,937 crore for revival of the two state-owned telecom companies.

Prasad said the government will raise Rs 15,000 crore through sovereign bonds. “Assets worth Rs 38,000 crore will be monetised in four years. Soon, 4G spectrum will be allocated to BSNL and MTNL,” underscored Prasad.

The package, however, caught most of the employees by surprise as until Tuesday, the finance ministry had not sent any approvals for the revival plan.

“The merger was first suggested by senior Shiv Sena and veteran trade union leader, Arvind Sawant. He was a former MTNL employee and he is close to Sena chief Uddhav Thackeray. He is currently the Minister of Heavy Industries and Public Enterprises,” explains Prahlad Rai, BSNL Employees Union General Secretary. Sawant had won from the South Mumbai constituency defeating former union minister Milind Deora from the Congress for the second time.

Rai said the government has to look into several technological and HR issues. “This deal will benefit MTNL more than BSNL as they are only in Mumbai and Delhi. There has hardly been any technological upgrade in MTNL, unlike BSNL. The government will have to work on that. Additionally, the MTNL pay scales are higher than BSNL, so how is the government going to bring parity between employees of both the companies? Moreover, MTNL employees have been promoted much more quickly than BSNL, so that will also affect the seniority,” underscores Rai.

Rai said the revival plan might imply that the government wants to ensure that at least 70,000 employees take VRS.

“The government has already reduced the age of retirement from 60 to 58 and it will come into effect form March 1, 2020,” added Rai.

In order to cut costs, the telecom minister said the government will offer an attractive VRS package for employees in both the companies. He said any employee above the age of 53 and half, who opts for the VRS, will be given 125% of the salary, pension and gratuity till the age of 60.

The general secretary of the Telecom Executive Association of MTNL (Delhi-Mumbai) AK Kaushik was surprised at the merger decision , but hailed it as a good move. “It is a welcome announcement. BSNL is present all over India and this would benefit MTNL. MTNL employees would be protected now and they would be safe. This would ensure that they would get salaries,” added Kaushik.

Keeping in mind the opposition that is likely to be voiced, the statement released by Prasad said the Modi government had offered a “very generous financial assistance to revive BSNL and MTNL. Now I would like to urge the employees of both these PSUs to work hard and help the government in making these organisations profitable.”

In 2017, a committee was formed to look into representation received by Arvind Sawant regarding improvement in services provided by BSNL and MTNL. The committee, which was chaired by BJP MP Bhagat Singh Koshyari, had said in its report that for the long-term survival and success, merger of MTNL and BSNL would be a good proposition. It had said that the merger would give both the entities a chance for competing against private sector players

The panel said the advantages inherent in an integrated national telecom infrastructure would pave the way for lower cost of investment and greater combined ability to face competition.

However, both BSNL and MTNL are yet to pay the salaries to their employees for the month of September.

BSNL has 1,63,000 employees, while MTNL has 22,000 in its workforce. The administrative cost for the allocation of 4G radio waves to BSNL is pegged at ₹14,000 crore and ₹6,000 crore for MTNL.