Losses of BSNL and remedies of the Government
In the Rajyasabha, while answering several questions raised
by MPs in July and August 2014 on the
viability of BSNL, the Minister for Communications and IT, Sri Ravishankar
Prasad has revealed the following facts and proposals:
1. The
losses of BSNL on its landline network and its net losses are as below:
|
Item
|
Loss for 2011-12
|
Loss for 2012-13
|
Loss for 2013-14
|
|
Loss on landlines
|
Rs 12669 crore
|
Rs 13445 crore
|
Rs 14979 crores
(provisional)
|
|
Net Loss
|
Rs 8851 crores
|
Rs 7884 crores
|
Rs 7085 crores
(provisional)
|
2. The
landline connections of BSNL have reduced by 38.04% during the period from
March 2009 to May 2014 and the market share of mobile subscriber base of BSNL
has reduced from 14.87% in March 2009 to 10.95% in May 2014.
3. The
wire line connections of BSNL were 2.247 crores as on 31.3.2012 and it declined
to 1.818 crores as on 31.5.2014.The wireless connections of BSNL were 9.851
crores as on 31.3.2012 and it declined to 9.162 crores as on 31.5.2014.The
total number of wire line and wireless connections taken together were 12.098
crores on 31.3.2012 And it declined to 10.98 crores as on 31.5.2014, with the
percentage of decline as 33.4%. The market share of BSNL and MTNL taken
together as on 31.5.2014 in wire line connections is 77.03% and wireless
connections is 10.44%.
4. The
market share of BSNL in wire line connections was 85.61% on 31.3.2012 and it
declined to 82.57%
5. The
revenues from operations of BSNL have reduced by 11.67% in the last five years
6. The
total debt of BSNL is Rs 6448 crores (unaudited) as on 30.6.2014. It was Rs
3335 crores on 31.3.2012, Rs 4772 crore on 31.3.2013 and Rs 5948 crore on
31.3.2014.
7. The
declining market share of BSNL is for the
following reasons:
·
The declining wire line business due to shift to
mobile communication
·
Inability to expand coverage due to finance and
procurement problems
·
Lack of adequate skill sets due to changing
nature of technology and customer centric business with focus on sales,
marketing and customer services
·
Stiff competition in the telecommunications
sector
8. The
following measures were taken by the Government to revive BSNL:
a) Waiver
of Government loan to BSNL involving an amount of Rs 1411 crores
b) Financial
support of Rs 6724.51 crores to BSNL on surrender of BWA spectrum
c) The
Government is formulating a coordinated plan aimed towards revival of BSNL by
addressing issues of high employee expense and gainful utilization of assets to
enhance availability of finances for network expansion and improvement in
Quality of Services.
d) BSNL
has submitted a proposal to offer Voluntary Retirement Scheme(VRS) to one lakh
employees to reduce employee expenses. After consideration of various options
and based on the recommendations of Group of Ministers, Department of
Telecommunications is considering a proposal to provide annual financial
support for reduction of employee expenses with certain conditions.
e) BSNL
has taken the following steps for improving its landline business:
·
Migration from Public Switched Telephone Network
to Next Generation Network(NGN) in the current Five year plan(i.e 2012-2017)to
provide enhanced value added services like Personalized Ring Back Tone,
Broadband VAS, Multi Media Video Conferencing, Wide Area Centrex, Voice over
Internet Protocol(VOIP) services and fixed –mobile services convergence etc(fixed-mobile
convergence means your cell phone will work on mobile networks when you are
outside your office or home and will work on landline network while you are at
home or office)[Note—these portions in italics are added by me…asokababu]
·
Redeployment of workforce with more focus on
Sales, Distribution and customer care activities
·
Measures to retain and enhance the landline
connectivity by increasing penetration of broadband.
·
Sales and marketing set up has been strengthened
by having exclusive channel management team consisting of 4500 exclusive sales
representatives.
·
Introduction of Call Detailed Record (CDR) based
billing, commercial and fault repair service and work order management system.
f) BSNL
is preparing a revival plan for increasing revenue potential, identifying
business opportunities, organizational restructuring to enable them to grow
into customer-centric companies with expertise in marketing and customer
services delivery and developing human resources strategy in line with
restructured organizational vision.
g) The
long term measures, including revival of BSNL and MTNL, would attempt to
position these PSUs to emerge as market leaders in the converged
telecommunications market. For an in-depth study on the implications of merger
of the two PSUs, three groups have been constituted to study issues of human
resources integration, technology integration, and corporate integration. Views
of the Unions on merger would be taken into consideration before a decision is
taken in best public interest and that of two companies.
If landline network is not there, BSNL would have been
in profit-But the society would have lost
As per the above figures given by the Minister, BSNL’s loss
on its landline network for the year 2013-14 was Rs 14979 crores where as its
net loss was Rs 7085 crores only. Thus if the landline network is not there,
BSNL would have been in a profit of Rs 7894 crores (14979-7085). The losses are
on account of landlines. The losses on landlines means that the expenditure on
landlines(including salaries of staff working on landlines, administrative and
operational expenditure on landlines, depreciation on landline assets etc) has
exceeded by Rs 7894 crores over the revenue on landlines for the year 2013-14.
But most of the staff of BSNL is engaged on landlines only. Thus the issue is
how to make the landline business profitable. Another question is since BSNL is
having vast landline network in throughout the country including rural and
backward areas which are necessarily loss making, whether BSNL should operate
its landline network only in urban areas like the private operators? If so, how
the fixed line broadband connectivity can be provided to the rural and backward
areas? Whether proper quality bandwidth can be provided on mobile connections
without the necessity for landlines in the loss making areas? As per the
technical considerations, quality bandwidth for broadband connections cab be
provided only through wire line connections. Therefore there is necessity to
maintain landlines in rural and backward areas for providing broadband
connections, although the landlines in these areas are loss making. In the
urban areas, the wire line connections are generally loss making. If BSNL has
not maintained the vast land line network even by posting huge losses, it would
not have been possible to provide internet and broadband connections in the
scale provided at present on wire line connections. As on 31.5.2014, BSNL’s
wired broadband (speed >512 Kbps) subscribers are 99.8 lakhs whereas the
next largest provider Airtel has 14 lakhs wire line broadband connections.
Thus the BSNL’s wire line network is socially required,
although it is essentially a loss making business. At the same time, with
proper steps taken by the Government and management in providing necessary
equipment, tools and material, the revenue on landline network would have been
more. In spite of this, there will be some loss to BSNL on landlines and it is
the responsibility of the Government to compensate BSNL for this, since the
landline network is being maintained as a social obligation by BSNL.
The decline in mobile connections
As per the statement of the Minister, the number of mobile
connections of BSNL has declined from
9.851 crores as on 31.3.2012 to 9.162 crores as on 31.5.2014.As per the
TRAI’s report, In May 2014 alone, while there is increase in the customer base of all other
operators (except Reliance), BSNL lost 15,73,275 mobile customers. In May 2014,
the proportion of VLR subscribers for BSNL was 61.53% i.e. only 61.53% of
mobile subscribers have made calls/accessed data etc using their mobile
connection. But the VLR subscribers for Idea, Airtel, Vodaphone and Relaince in
the same month were more than 94%. Thus even in mobile services, BSNL is losing
its customers and market share and even in these customers only 61.53% are active
using their connections. Non procurement
of the required GSM equipment in time, defects in operation and maintenance of
the services, defective services, and poor strategy in marketing and sales are
the reasons for this.
Recommendations of Deloitt Consultant-A serious attack on the job security of BSNL employees
Instead of compensating BSNL thus, the Government and BSNL
management are now resorting to a serious attack on the job security of BSNL
employees. The Minister Sri Ravishankar Prasad told in Rajyasabha, “ BSNL is preparing a revival plan for
increasing revenue potential, identifying business opportunities,
organizational restructuring to enable them to grow into customer-centric
companies with expertise in marketing and customer services delivery and developing
human resources strategy in line with restructured organizational vision.” He also told that the plan for revival of
BSNL includes “addressing the high addressing the issue of high employee expense”. This
means there will be an organizational restructure of BSNL and according to that
the man power also will be restructured. In fact, BSNL has appointed the
Deloitte Consultant, on the issue of revival of BSNL. It submitted its
recommendations recently.
Following are the important recommendations of this Deloitte
Consultant:
a) Restructuring of the field units of BSNL: Instead of the present 300+ SSAs, there
should be only 167 SSAs by merging some SSAs and these 167 units are to be
called as Area Offices
b) These
Area Offices will have to focus on sales, marketing and customer service delivery.
c) These
Area Offices also have to monitor the outsourced agencies for O&M of
wireless and wire line networks. Thus the entire work of Operation and
maintenance of wire line and wireless networks has to be outsourced.
d) The transmission, network planning has to be
moved to circle office. The non-territorial circles like Projects and
Maintenance Circles, Civil and Electrical wings etc have to be abolished.
e) After full implementation of ERP, the
functions such as HT and Finance have to be moved to Circle Office. Thus there
will be no staff, pay, TRA sections in Districts. According to these
recommendations Sr ToAs are required only until implementation of ERP.
f) For
sales, marketing, customer service delivery, and IT, fresh recruitment of a total 13300 executives
has to take place, but majority of them
will be off the rolls of BSNL. Thus there will be a new situation with two
kinds of employees, on roll and off roll.
g) The
recommendations have declared that most of the non-executives are surplus,
even without full implementation of ERP and outsourcing of O&M.
h) According
to these recommendations, in the case of AP Circle, even without implementation
of ERP and without outsourcing of O&M, out of the 20775 non-executives in
all the SSAs of the Circle, only 5889 are required. Similarly, as per these
recommendations, out of the 15378 non-executives in all the SSAs in Gujarat ,
only 8415 are required. Similarly in UP(E) Circle, out of the 8425
non-executives working in all the SSAs,
only 1798 are required. In this manner,
these recommendations have proposed drastic reduction in the requirement of
non-executives, in all the circles. These
recommendations have proposed to show the vast majority of the non-executives
as surplus, to be shown against supernumerary posts.
i)
The excess staff beyond requirement has to be
shown against supernumerary posts. This
means they will not be shown against their own posts which will be abolished
and will be shown against supernumerary posts, thus declaring that they are
surplus and unwanted.
j)
BSNL has to claim half of the salaries of the
employees shown against supernumerary posts, from the Government.( After full
implementation of ERP and outsourcing of O&M as per these recommendations,
more number of non-executives will be declared surplus and shown against
supernumerary posts. )
Thus these recommendations are a serious attack on the job
security of the BSNL employees. The staff strength has been in decline
considerably after the formation of BSNL due to lack of recruitment and large
scale retirements on superannuation. Therefore there is no basis for declaring
the large number of staff as surplus. It is only a mind game of the management
and Government to make the propaganda that the staff are surplus. Also, these recommendations, if implemented,
will result in two sets of employees-on rolls and off rolls, thus creating
disunity among employees and weakening their potentiality to fight against the
attacks on them. These recommendations, if implemented, will lead to
privatization of the maintenance and operations of the networks of BSNL, both
landline and mobile.
The BSNL Corporate Office has issued a circular to all CGMTs
vide No.4-2/2014-Restg dated 18.7.2014 asking them to come prepared for a
discussion on these recommendations proposed to hold a discussion in the Heads
of the Circles meeting to be held on 12th & 13th
August 2014(now postponed to 21st
and 22nd August 2014). Thus the management is going ahead with the
process for implementation of these recommendations. It is a part of the
Minister’s statement in Rajyasabha that the Government is “formulating a
coordinated plan aimed towards revival of BSNL by addressing issues of high
employee expense”. Thus a serious attack on the job security of BSNL employees
is in there in the near future.
Merger of BSNL and MTNL-another proposal for further
attack on BSNL
The Minister told in the Rajyasabha that merger of BSNL and
MTNL is one of the long term measures proposed for the revival of BSNL and MTNL
and three groups were constituted to study the implications of this merger.
While BSNL and MTNL have been continuously in losses since 2009-10, MTNL has
posted a profit of Rs 7825 crores for the year 2013-14 not due to increase in
revenue or decrease in expenditure, but due to the Government’s decision to
write back of provisions on account of pensionary liabilities of MTNL since
1.10.2000 and spectrum amortization costs, as per the decisions of the
Government. Thus the issue of
operational losses to MTNL continues in spite of this. When both MTNL and BSNL
are in losses, how their merger can result in the magic of profit to them? MTNL
is disinvested to the extent of 43.75% and if BSNL and MTNL are merged, the
combined entity will be a disinvested company, whereas at present BSNL is a
100% Government owned company. Thus, the merger will lead to disinvestment and
privatization in installments. Moreover, as on 31.3.2013, the net worth of MTNL
was negative, with (-)2784 crores. The net worth of BSNL on the same date was
Rs 63639 crores. Their combined net worth as on 31.3.2013 would be Rs 60855 crores.
Their combined losses as on 31.3.2013 would be Rs 39777 crores. Thus as on
31.3.2013, their combined loss was more than 50% of their combined net worth
and hence the combined entity would become sick as per rules on the date of its
formation itself! Merger will not result in MTNL scales for BSNL employees, but
will result in BSNL scales for MTNL employees, as per the rules issued by the
Government for payment of Government pension to MTNL employees. On the other
hand, the merged company would be a sick and disinvested company. Thus merger
will create more problems instead of solving it.
Forming a subsidiary tower company by separating the
62000 towers from BSNL
As per the reports in the news papers on 25.6.2014, the
Communications Ministry has prepared the draft of a note on the merger of BSNL
and MTNL and sent it to the Communications Minister Ravi Shankar Prasad for his
approval. It seems the note has proposed for forming a separate 100% subsidiary
tower company by separating the towers from BSNL, with outsourcing of
operation, maintenance, sale and marketing functions. But some other reports
talked about inviting a private partner into the tower company by forming a
joint venture. As per the reports in various newspapers, a DoT has proposed a
note It seems the note has proposed for
forming a separate 100% subsidiary tower company by separating the towers from
BSNL, with outsourcing of operation, maintenance, sale and marketing functions.
No proposal for financial assistance to BSNL for
expanding and upgrading its services, but all proposals for fragmentation and
privatization of BSNL along with a serious attack on the job security of the
employees
The replies given by the Minister Sri Ravishankar Prasad on
the issue of revival of BSNL and MTNL are clearly indicating that the Modi
Government is following the UPA Government in rejecting the compensation to
BSNL for the huge losses incurred by it on landlines which are maintained by it
as a social obligation. It is equally as adamant as the UPA Government in not
providing any financial help to BSNL for expanding and upgrading its network.
As per the previous CMD Sri R.K.Upadhyay, Rs 40,000 crores capital is required
to be invested by BSNL during 12th plan (2012-17) for expanding and
upgrading the network of BSNL so that it is able to achieve profit and
viability by 2017. Since BSNL is incurring losses on landlines as a social
obligation for the commercially unviable landlines, it is the responsibility of
the Government to evolve a policy for compensating BSNL for
these losses so that it can utilize the amount
for expanding and upgrading its network. But such a help is being denied
by the Modi Government. Instead, it is
resorting to various proposals to divide BSNL into Tower Company and Services
Company, to privatize the operation and maintenance of these tower and services
companies, to declare thousands of staff as surplus and to merge BSNL and MTNL
to create a sick and disinvested entity etc. Its talk of providing annual
financial support for reduction of employee expenses with certain conditions is
aimed at declaring staff surplus.
The proposals of BSNL employees for the revival of
BSNL
The Forum of Unions and Associations of BSNL Non-Executives
and Executives has been demanding that the Government should take the following
steps for reviving BSNL:
1. Fully
compensate the losses incurred by BSNL on landlines
2. Refund
the Rs 18500 crore amount collected by the Government from BSNL in the
name of 3G and BWA spectrum. BSNL was compelled to take 3G spectrum even for
the commercially unviable circles, whereas the private operators are allowed to
take 3G spectrum only for some circles and share the spectrum of other
operators in the remaining circles. BSNL was allotted poor quality BWA spectrum
and it surrendered it back to Government in most of the circles.
3. Financial
assistance to BSNL for expanding and upgrading its services
4. Necessary
procedure for immediate procurement of the required equipment, tools and
materials
5. BSNL
be allowed to pay pension contribution on the actual pay of the employee
instead of on the maximum of the pay scale.
6. BSNL/MTNL services be made mandatory for
Central/State Government departments and PSUs.
7. Filling
up the posts of Directors of the BSNL Board(BSNL is now not even having a
regular CMD)
8. Absorption
of ITS officers in BSNL
9. Dropping
the proposed tower company/BSNL-MTNL merger/Deloitte consultant
recommendations.
The Government has to be compelled
to concede these demands by organizing a serious struggle and mobilizing the
support of the people. It is also necessary for the BSNL employees to work with
dedication for extending better service to the customers.
…..P. Asokababu
