JOIN USBSNL likely to issue bonds for financing VRS
The state-run telecom services provider, Bharat Sanchar Nigam Limited is likely to issue bonds guaranteed against its huge assets base to finance the voluntary retirement scheme. It, however, doesn't see the proposal of reduction in the retirement age going through.
According to the highly placed sources in the crisis-ridden telco, at the last board meeting of the company, the proposal to raise bonds to finance the VRS was looked upon favourably.
VRS, on the other hand, will result in annual savings in the range of Rs 1,671 crore to Rs 1,921.24 crore. It is estimated that VRS will cost the company about Rs 13,049 crore. The company expects that about 20,883 people will take up the VRS scheme.
However, a major chunk of ageing working workforce (33,568) would have left the company in case the retirement age is reduced by two years.
Sources, however, said that the government, fearing a backlash, hasn't responded favourably to the proposal approved by the BSNL board, wherein it had sought to reduce the retirement age of employees from current 60 to 58. "The government might have looked into the legal aspect of the issue. Hence, they don't seem to be keen on taking it up," a source in the know said.
Earlier, in its board meeting held in the month of March, the company had approved both the proposals and sent to the government for the nod. With general elections around the corner, the government decided to wait and watch strategy.
The average age of the BSNL workforce is estimated to be above 55 years.
The company's board has also decided to have an operational merger of BSNL and MTNL. "MTNL will act as a subsidiary. Though both companies will continue to operate independently, yet their operations would be merged," an official said.
Moreover, the companies board has decided to raise long term debt once the government decided to allot spectrum to BSNL.
After BSNL’s losses began to mount, the government had set up a three-member panel for its revival, which included Prof Rekha Jain (co-ordinator), Prof Vishal Gupta and Professor Ajay Pandey — all professors at Indian Institute of Management-Ahmedabad (IIM-A).
The state-run corporation has been reeling under financial stress after the advent of Jio. The company’s revenues dipped by 20% during 2017-18, on the back of predatory pricing unleashed by Mukesh Ambani-owned Jio. The company clocked Rs 25,071 crore in revenues during 2017-18, as against Rs 31,533 crores in 2016-17. The company made a loss of Rs 7,993 crore during 2017-18, up 66% over the previous year. BSNL is expected to post a loss of Rs 14,000 crore in 2018-19 and lower revenues of around Rs 19,000 crore.
In the wake of the February salary issue, Kotak Equities had said BSNL’s total loss may have crossed a whopping Rs 90,000 crore. The last time BSNL witnessed profits was a decade ago in 2008-09 when it clocked an annual profit of Rs 575 crore.