After successfully bringing State-run Bharat Sanchar Nigam limited (BSNl) into the profit zone, revival of public sector telecom firm Mahanagar Telephone Nigam limited (MTNl) is on Government agenda. The Government has prepared a clear roadmap for the revival of the loss-making State-owned MTNl in the competitive telecom sector in the country. As per the roadmap, Department of Telecommunications (DoT) under the Telecom Ministry will set a tripartite committee consisting of members from both MTNl and BSNl. The proposed panel will look into all details regarding financial and network businesses of the two State-run telecom firms.
The mega plan of revival mechanism is scheduled to kick off from April 1, 2017.
The proposal comes at a time when both the financially-struggling public sector telecom companies need deeper synergies in revenue sharing and financial management, especially to help MTNl.
Under the guidance of DoT, the MTNl Board on May 30 has cleared two revival proposals (network and financial management) and submitted them to the Government for its approval. The agenda note of the two proposals, a copy of which is in possession with The Pioneer, said that there would be an engagement of BSNl as a managed service partner for MTNl mobile services on network and financial management issues, including spectrum valuations, staff salary, 2G/3G businesses etc.
When contacted about the development, a senior DoT official said on the condition of anonymity, “Earlier the Government had a merger plan between these two public sector units but it did not work due to various reasons. As far as revival of MTNl is concerned, for last one year or so, we have seen huge success in BSNl, now revival of MTNl is the Government’s next agenda. We have already received the proposals from MTNl Board and it is the process of approval from both DoT and Telecom Ministry as well.”
The two proposals on revenue-sharing pattern have been cleared by the MTNl board, in which network and financial management issues have been discussed. For network issues, the MTNl has proposed to facilitate the network business in a smoother and healthy way and division of work between the two PSU telecom firms. “BSNl shall supply 40 Node-B, Radio Network Controller or RNC, Serving GPRS Support Node (SGSN) for lutyen’s Delhi Zone and MTNl will commission them immediately in the next three months and additional 60 Node-B for NCR area to be commissioned in next four months,” the agenda note said.
As far as wireless wing is concerned, BSNl will take over operation of MTNl wireless network from April 1 2017. “However, necessary orders for upgradation of the equipment shall be placed by MTNl immediately. Technical team of both the organisations will work together for improvement of mobile services here onwards,” it said, adding that BSNl will make investment in network upgradations and expansion as per its business decision after April 2017.
However, it said, MTNl shall continue to provide infrastructure support in building space, transmission bandwidth, and power infra etc for core network and BTS site as on whereon basis and the power supply and other consumable charges will be borne by BSNl after April 1, 2017 as well.
On staff issues, the note stated that total present staff cost plus building space charges including present transmission network used in core network shall remain fixed at Rs 275 crore per year (cost for FY 2015-2016) and shall be borne by BSNl. “All operations including billing will be managed by BSNl after April 1, 2017. The MTNl will become a franchise of BSNl at existing common service centres (CSCs) as per the business policies of BSNl,” it added.
On financial management, the agenda note pointed out that as MTNl has already paid Rs 6,564 crore for procurement of 3G spectrum, the proposed committee will decide the price of 3G spectrum to be paid by BSNl to MTNl. “It will also determine the business valuation of MTNl’s 3G and 2G services which will for m basis of BSNl payment to MTNl for 2G/3G business,” it said, adding that the mechanism of financial transactions would be between BSNl and MTNl such as upfront payment to MTNl or transferring the short term loan liability of equivalent amount from MTNl to BSNl or any other mechanism.”
The proposal aimed to bring deeper synergies between the two financially-weak telcos to principally help MTNl. As MTNl operates in Delhi and Mumbai to overcome market challenges and turnaround its consumer mobile business, BSNl operates in the rest of 22 circles in the country. For the fiscal ended March 31, 2016, MTNl posted a net loss of Rs 2012.24 crore which includes a loss of nearly Rs 1,800 crore on account of mobile services alone.