Communications and information technology minister Kapil Sibal has sought the intervention of Prime Minister Manmohan Singh to chalk out a revival strategy for the loss-making state-run telecom operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).
In a recent communication to the prime minister, Sibal said suggestions and interventions of different ministries would be required to consider possible options to revive BSNL and MTNL. He also suggested a group of ministers be formed to look into the issue.
Due to change in the business environment and hyper competition in the telecom space, financial conditions of both companies have deteriorated in the past three to four years, according to Sibal's note.
Although the results for 2012-13 have not yet been declared, Sibal expects the net worth of MTNL would have been completely eroded.
Unless the government takes immediate measures to revive and revitalise the two telcos, BSNL and MTNL would turn sick very shortly, Sibal said. He noted that many recommendations of the Sam Pitroda Committee, set up in 2010 to suggest a path for positioning BSNL and MTNL for better delivery of services, had been implemented, but that could not help the troubled telcos as the environment had changed significantly since then.
MTNL, which operates in Delhi and Mumbai, has been reporting losses since 2009. This disqualifies it from being a Navratna company. Making losses for two consecutive years disrobes an entity of the Navratna status. MTNL had posted a loss of Rs 2,611 crore in 2009-10 and Rs 2,802 crore in 2010-11.
In 2011-12, BSNL made losses of Rs 8,800 crore and MTNL Rs 4,100 crore. BSNL had gone to the government with a request to return its BWA (broadband wireless access) licence in 13-14 circles, for which it had paid Rs 8,300 crore.
BSNL caters to about 14.82 per cent of the total mobile users in India, while MTNL has a market share of 0.76 per cent. However, both the companies have dominant share in the fixed-line segment, which is not growing anymore.