Telecom Minister Ravi Shankar Prasad on Wednesday blamed stiff competition, high employee cost and no 4G services for the poor financial state of BSNL and MTNL.
Absence of 4G services and high employee costs are hitting at the competitive strength of the public sector companies - Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telecom Nigam Limited (MTNL) - at a time when private carriers are offering data services at near to the ground tariffs, Communications and IT Minister Ravi Shankar Prasad said in Lok Sabha, while adding that proposals to revive the deeply-stressed companies was being prepared.
"For BSNL and MTNL, stiff competition in mobile segment, high employee cost and absence of 4G services (except in few places for BSNL) in the data-centric telecom market is eroding their competitive strength," the Minister said in Lok Sabha on Wednesday.
He said revival plans of BSNL and MTNL are underway currently.
"Indian Institute of Management, Ahmedabad and Deloitte were engaged to facilitate the preparation of the revival or restructuring plan of BSNL and MTNL, respectively. Pursuant to their recommendations and approval of respective Boards, a comprehensive revival plan for BSNL and MTNL is under preparation," he added.
Requests from the carriers to grant additional spectrum with government support for providing 4G services is also included in the revival plan, and the telecom requests from the carriers to grant additional spectrum with government support for providing 4G services is also included in the revival plan, and the telecom department is taking steps, such as providing contracts to install services in Left Wing Extremist and low connectivity areas and hotspots in rural areas.
Mr Prasad clarified that no proposal for closure of both PSUs was under consideration of the government. As of May-end, BSNL had 1.63 lakh employees and MTNL had 21,679 employees.
Mr Prasad also pointed out the total employee cost of MTNL and BSNL far outweighed the total employee cost for private telcos. The employee cost for BSNL is 75.06 per cent while for MTNL the employee cost is 87.15 per cent of the total income.
Employee cost for private telecom companies varies between 2 to 5 per cent of the total income. "We want to take care of employees and revive PSUs because for fair competition in market, it is important to have these PSUs."
Many MPs in Parliament had raised the issue of the ongoing crisis in BSNL -- its poor financial status as well as network problems.
Responding to the allegations, Ravi Shankar Prasad said: "We want BSNL to survive and work effectively. As far as their balance sheet is concerned, we are looking into the matter."
The minister said there is no proposal for closure of both PSUs was under consideration of the government.
Separately, the government said that the quantum of foreign direct investment (FDI) inflows into India's telecom sector have plunged to $2.66 billion in FY19 from over $6.21 billion in FY18, but argued that the sharp fall could not be attributed to either financial stress in the industry or regulatory uncertainty.
On the controversial issue of 5G trials involving Huawei, Mr Prasad said that the Chinese vendor's participation would hinge on the recommendations of a panel looking into 5G security issues. A committee headed by the principal scientific advisor (PSA) has been recently constituted to give recommendations on security relating to 5G technology and trials in India.
The government has received six proposals for 5G trials, including those from Huawei and China's ZTE. The minister added that 5G field trials would be undertaken only through licensed telcos "in a restrictive, limited geographical area for specific use cases".
The government is yet to take a call on Huawei's participation in 5G trials and eventual deployments even while telcos have sought clarity before taking a long-term view on investment decisions and Huawei is seen a cost effective telecom vendor.