Indian government asks ministries and PSUs to give preference to BSNL, MTNL

In a bid to enhance the revenues of BSNL and MTNL, the government has proposed that union ministries, public sector undertakings and autonomous bodies give preference to the services of the state-run telecom operators.

"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," Minister of State for Communications and IT Killi Kruparani said in a written reply to the Rajya Sabha.

She said the government had constituted a group of ministers (GoM) on April 17, 2013 to recommend short term, medium term and long term measures for revival and revitalisation of BSNL and MTNL.

In a separate query, Kruparani said BSNL suffered a loss of Rs. 7,884 crores in 2012-13 whereas MTNL's losses stood at Rs. 5,321 crores in the same period.

"The principal reasons for the rising losses of BSNL and MTNL are due to sharp decline in revenue and increase in expenditure," she said on December 6.

She said the revenues of the state-run telecom PSUs are declining due to substitution of fixed wireline to mobile wireless, stiff competition in mobile wireless sector, payment towards 3G and broadband wireless access spectrum charges.

Decrease in average revenue per user in mobile wireless sector is also hitting the telecom operators' revenues, she added.

"The principal reason for the increase in expenditure is mainly due to large legacy workforce as a result of which employee expenses are currently at around 50 percent of revenues for BSNL and 103 percent for MTNL," she added.

She said the GoM had made recommendations for payment of pension to the employees of MTNL on the pattern of BSNL, surrender of BWA spectrum by BSNL in six service areas and MTNL in Delhi and Mumbai for which refund will be paid to the operators.

The GoM had also recommended waiver of unpaid portion along with the interest of notional loan of Rs. 7,500 crores given to BSNL as part of the capital structure of the company at the time of its formation.

"The above recommendations of the GoM are being taken to the Cabinet for approval," she added.