BSNL workforce to get salary before Holi, government releases Rs 171 crore to MTNL

While the Rs 171-crore funding to MTNL was part of an internal settlement, Rs 850 crore to BSNL will come from the telco’s internal accurals.
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BSNL workforce to get salary before Holi, government releases Rs 171 crore to MTNL NEW DELHI: NEW DELHI: The Department of Telecommunications (DoT) has released Rs 171 crore to pay outstanding salaries to 23,000 employees of Mahanagar Telephone Nigam Ltd (MTNL), and has reached an understanding with Bharat Sanchar Nigam Ltd (BSNL) management and employee unions to release Rs 850 crore before Holi.

While the Rs 171-crore funding to MTNL was part of an internal settlement, Rs 850 crore to BSNL will come from the telco’s internal accurals.

“We have released Rs 171 crore on Tuesday for MTNL to pay salaries and arrears to its employees. The BSNL management and employee unions have been convinced that their salaries will be paid before Holi,” a senior official said requesting anonymity.

MTNL, which operates in Delhi and Mumbai, is expected to start salary disbursements from Wednesday. DoT has been meeting the salary expenses of MTNL.

The official added that BSNL will be able to pay all salaries and dues amounting to Rs 850 crore before March 21. The financially-stressed BSNL has, for the first time, delayed salaries for February to its 176,000 workforce.

The development comes after telecom minister Manoj Sinha Tuesday met finance minister Arun Jaitley and sought funds to meet salary payments to cash-strapped state-run telcos.

Besides struggling to compete for customers with private telcos, BSNL and MTNL have also been ailing because of the high revenue to debt ratio due to a high number of government employees that were transferred by DoT to them at the time of their formation. The revenue to wage ratio in case of MTNL has swelled to 90% and to 67-70% for BSNL.

MTNL has a debt of around Rs 20,000 crore on annual revenue of Rs nearly 2,700 crore while BSNL has debt of Rs 13,000 crore on an annual revenue of about Rs 32,000 crore.

However, of their workforce, it is estimated that some 16,000 MTNL employees and half of BSNL’s staff will retire in the next 5-6 years.

Meanwhile, the Digital Communication Commission, an inter-ministerial panel that is the highest decision-making body in DoT, has asked both the loss-making telcos to explain their turnaround strategy and give an assurance to achieve higher revenue for getting financial support.

The two companies have sought financial support, 4G spectrum and approvals for asset sales as part of their revival plans.

Both the firms have asked for permissions to monetise their land assets as well as the voluntary retirement scheme for employees on the Gujarat model. Under the Gujarat model, an amount equivalent to 35 days of salary for each completed year of service, and 25 days of salary for each year of service left till retirement is offered.

The VRS scheme for BSNL and MTNL will have a revenue impact of Rs 6,365 crore and Rs 2,120 crore, respectively, as per government estimates.

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