VRS for MTNL employees above 50 years of age: Can the PSU cut costs?

THE inter-ministerial panel Telecom Commission (TC) recently decided to offer a voluntary retirement scheme (VRS) to beleaguered state-run telecom operator Mahanagar Telephone Nigam Ltd (MTNL) employees who are 50 years of age and above. The objective was to cut down on soaring costs. “Government can save around Rs 500 crore-Rs 600 crore in a year by giving VRS to some employees of MTNL. It can save up to...
Rs 300 crore every year from its assets such as buildings and towers by renting them out, more deployment of CCTV cameras with local authorities,” a senior government official was quoted as saying in a national daily.
The official said the government would spend around Rs 2,000 crore for the VRS.
MTNL has around 46,000 employees, 26,000 of whom will be retiring in the next 10 years. Therefore, the government thought of saving costs by giving the VRS option to 20 per cent of its employees who are above 50 years of age.
The proposal will go to the Cabinet for approval in the next few days.
In the meanwhile, the TC has also decided to auction all the telecom spectrum in line with the reserve prices suggested by the Telecom Regulatory Authority of India (TRAI), which can fetch the government around 5.36 lakh crore.
The once crowning jewel of the government, MTNL along with BSNL, are running into heavy losses over the years. The NDA government feels that its revival is tough but not impossible. Narendra Modi-led NDA government has assured to provide all possible help to resurrect the loss-making telecom firm.
"Revival of MTNL is tough but not impossible. Government will provide all possible support for its revival," Telecom Minister Ravi Shankar Prasad had earlier said.
The minister also cited the turnaround at another state-run telecom firm BSNL, which posted an operating profit after many years.
MTNL posted a net loss of Rs 704.93 crore in third quarter ended December 31, 2015 while its total income during the quarter stood at about Rs 770 crore. The minister said both public sector firms BSNL and MTNL turned into loss-making units during the 10 years of UPA regime, and added the telcos were in profits when BJP-led NDA government relinquished office in 2004.
Earlier, the government provided a refund of Rs 492.26 crore to MTNL on account of liability arising out of levy of Minimum Alternate Tax (MAT) towards its financial support.
According to an IIM-Bengaluru report MTNL will not be in a position to continue the business beyond one or two years without government support. The report has examined five options for MTNL's revival: raising equity from the market, merger with BSNL, sale of mobile division along with licence and all related assets, surrendering 2G and 3G spectrum to government and the strategic sale by way of transferring 51 per cent or more stake to a private entity. The report has recommended two options -- surrender of spectrum and taking service of MTNL in Digital India, in order of preference that government can consider.