The union cabinet today approved the proposal for revival and merger of BSNL and MTNL by allocating Rs. 23,814 crore for 4G spectrum, debt restructuring through long term bonds worth Rs. 15,000 crore and VRS (Voluntary Retirement Scheme) funding cost to the tune of Rs. 17,169 crore. In toto, the PSU will be receiving Rs. 55,983 crore from the government.
The big question is will revival package save BSNL and MTNL?
This is the last revival package to be given to BSNL and MTNL and BSNL needs to keep its house in order. I think it is possible for the board to save BSNL and MTNL if they focus on smooth merger, decentralization and control, fiber monetisation, tower monetisation, bagging government orders, building rapport with vendors and developing cordial relationship with DoT.
Smooth Merger: The board of BSNL and MTNL needs to come out with VRS Scheme within a month so that it is effective from Ist of December, 2019. It is expected that around 50,000 employees will opt for VRS scheme provided the scheme is attractive for 163,000 BSNL employees and 23,000 MTNL employees. Not only this even, BSNL needs to accommodate three board members of MTNL either by incorporating them as director in the given setup or expanding its board to nine from existing six. The merged entity will also need to see how they can balance the salary of MTNL employees as their salary is higher than BSNL employees so that the merger process is smooth.
Decentralisation and Control: The merged entity needs to work on decentralisation at the circle level and it needs to be controlled from the top so that the focus is on bagging orders, timely execution of projects and also getting payments on time. Decentralisation at the circle level will be a win-win for all provided it has adequate control measures so that the focus is on team work and increased productivity and efficiency.
Fiber Monetisation: Sharing of OFC is the order of the day and BSNL should not delay this any further. The company should lease its fiber to third party on a long term lease and use this money to build its 4G and 5G network (as and when it is implemented by operators). Presently, all Indian operators are planning to lease/sell fiber to third party so that they can lower their capex cost for building 4G and 5G network. This should be BSNL’s top priority if it wants to revive the company.
Tower Monetisation: BSNL has leased around 13,051 tower sites whereas MTNL has leased around 392 tower sites. The new BSNL will need to monetise all its towers by leasing it to other operators on a long term lease at the earliest. This will provide the company cash to fund its capex.
Bagging Government Orders: BSNL needs to refocus its attention on bagging large government orders at regular intervals by repositioning as Government Service Provider (GSP) for both central government as well as state government on nomination or tender basis. The focus here should be on providing complete solutions by tieing up with relevant stakeholders to complete its portfolio of services. Focus should be also on timely completion of project. BSNL needs to give high priority for government orders and restructure its enterprise business accordingly. This will help them increase their revenues and also help them to be profitable in the long run.
Building Rapport with Vendors: BSNL and MTNL needs to pay an outstanding of around Rs. 25,000 crore to vendors. For building rapport with the vendors, BSNL needs to clear their dues at the earliest so the vendors will support BSNL for their existing network and also help the company for future technologies like 4G and 5G. This will also provide confidence to the vendors that BSNL is there for the long haul.
Cordial Relationship with DoT: BSNL should have cordial relationship with DoT if they want to prosper as this was not the case earlier and for which they have already paid the price. BSNL should also focus on getting BBNL (Bharat Broadband Network Limited), USOF (Universal Service Obligation Fund) and Department of Posts (DoP) projects on nomination basis through DoT. Not only this, the focus should be on getting MeitY and Law department projects.
All these strategies will help BSNL to come out of the crisis in the next two years provided they adhere to it so that they are able to repay its total loan amount of Rs. 39,000 crore (Rs. 20,000 crore for BSNL and Rs. 19,000 crore for MTNL) and come out from the red.