Within one year of revival plan, BSNL & MTNL EBITDA turns positive

• Within one year of the revival plan, EBITDA of telecos BSNL and MTNL turn positive

• Both PSUs benefitted from a sharp reduction in wage bill due to the effective Voluntary Retirement Scheme (VRS)

New Delhi: Five years ago, under Union Minister Ravi Shankar Prasad, BSNL's growth in income and ability to contain expenditure in salary, administrative, employee remuneration and other benefits, helped in growing EBITDA to Rs 3,855 crore in 2015-16 from Rs 672 crore in 2014-15 and now after few troubled years and a revival package BSNL is once again back on the track of profitability.

The government, committed to reviving BSNL for public service and fairness and granted a package to support the PSU, called for a lot of discussions and debates in both houses of the Parliament. "We are going to revive BSNL and make it profitable, "Telecom Minister Ravi Shankar Prasad told the Lower House during the question hour in November 2019.

Now within a year of the revival plan, the state-owned undertakings Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have turned EBITDA positive in the first six months of this financial year. While for BSNL, EBITDA rose from minus Rs 3,596 crores for the half year ended in September 2019 to positive Rs 602 crores, for MTNL the corresponding figures were minus Rs 549 crores in September 2019, and the current figure, positive Rs 276 crores.  According to the Department of Telecommunications (DoT) sources, both organisations are expected to reduce their losses by 50 percent when compared to FY 2019-20.

Reduced wage bill, positive balance sheet

The reasons for better performance include a sharp reduction in wage bill due to the Voluntary Retirement Scheme (VRS) (nearly 50 percent workforce of BSNL and 75 percent of MTNL was reduced).  Equally important, BSNL was able to maintain its revenue and cut down on other costs. BSNL is also rapidly expanding its Fiber-To-The-Home (FTTH) connections and the progress is being closely monitored by DoT. In the mobile segment, the market share has increased to 10.36 percent in October 2020 as per figures published by TRAI.  BSNL added over 10 million new customers during this financial year in the mobile segment. This has also given a fillip to the government's Digital India drive of cashless transactions as online transactions has increased by over 43 percent in December 2020 since the last financial year.

It will be recalled that the Union Cabinet had approved the revival package for BSNL/ MTNL in October 2019 which, inter-alia, included VRS, support for 4G spectrum, monetisation of core and non-core assets, Sovereign Guarantee for Bonds to be raised by the PSUs and merger of MTNL and BSNL in the short run.

ALSO READ: Adani Green commissions 25 MW solar power plant in UP's Chitrakoot

BSNL and MTNL have very successfully raised money from the bond route. In the recent bond-offer of MTNL, the issue was subscribed more than three times and for BSNL more than three times. According to DoT sources MTNL/ BSNL have been able to monetize core and non-core assets totaling Rs 1,830 crores in 2019-20. This figure is expected to be in excess of Rs 3,000 crores in the current year.  In this regard, six properties are expected to be approved for auction through the DIPAM route.

Effective monetisation of assets

BSNL is monetising its tower assets by leasing out its towers. It earned Rs 1,018 crore in the previous year and has planned to securitize the earnings from tower rentals. BSNL towers have a unique proposition of a fibre connection in more than 70 percent which makes them highly attractive for TSP. Fibre has been monetised by leasing it out to private TSPs and BBNL. It has leased out 2 lac kilometres of OFC at the rate of Rs 18,000 per Km. per year earning a revenue of Rs 360 crore.

Insofar as 4G services are concerned, as per DoT the position is quite clear that the core network for 4G will be totally made in India.  According to DoT sources, BSNL and MTNL are strategic assets and will provide a big impetus to the Indian manufacturers in the field of telecom.

It will be recalled that the Indian mobile communication market now has only 4 players of which 3 are in the private sector and the fourth is the BSNL/MTNL combine.  In the wireline or landline segment, BSNL/MTNL still has about 50% of the share with a considerable network across the country. The PSUs are hopeful of leveraging this strength by offering the services on fibre and linking this with FTTH connections.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)