Give Priority Preference To BSNL, MTNL Service; Government Asks Its Employees

Considering the dire strait, state-run Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) are in, the Government has decided to lend its own helping hand.

It’s no secret that BSNL and MTNL are in deep financial trouble. With poor revenue and mounting losses, coupled with huge operating expenditure via salaries and infrastructural spending, both of these companies have been on the verge of bankruptcy. This has the government worried. But since these are state managed entities, closing them is not an option. Instead the government has proposed a mandate that will ask its own employees to give preference to the services offered by these companies, said Killi Kruparani, Minister of State for Communications and IT, in an official reply to the Rajya Sabha, regarding the issue,

“Proposing preferential treatment to BSNL and MTNL services in Central Government Ministries/Central Government public sector undertakings and autonomous bodies to enhance the revenues earned by BSNL and MTNL.”

Will such recommendation help BSNL and MTNL?
Kruparani has confirmed that BSNL suffered a loss of Rs. 7,884 Crores (US$ 1.3 Billion) in 2012-13 whereas MTNL’s losses stood at Rs. 5,321 Crores (US$ 872 Million) in the same period. Kruparani further suggested that the primary reason for such a huge blotch is because of the sharp decline in revenue and increase in expenditure.

Further analysis will reveal that the usage pattern is gradually but surely showing a shift towards the Wireless form of communication. But these companies still substantially offer wired forms of internet, namely Broadband. Due to this substitution of fixed wire-line to mobile wireless, stiff competition in mobile wireless sector, payment towards 3G and broadband wireless access spectrum charges, both BSNL as well as MTNL are suffering acutely.

Under such dynamic and competitive environment, these PSUs simply can’t compete and drive their revenue up, lamented Kruparani. Hence, the vast Government employee pool may be able to offer some help. Shockingly, employee expenditure of BSNL is 50%, whereas in case of MTNL it is company-killing 103%! In comparison, private players don’t let their expenditure on employees be anywhere above 10-20%. Under such clear circumstances, do you think, Kruparani’s advice is correct?

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