Lok Sabha Question No. 47 (STARRED), answered on 2016-07-20
Subject: Revival Plan of Telecom PSUs
Ministry: COMMUNICATIONS
Asked by: LAXMAN GILUWA, J. JAYASINGH THIYAGARAJ NATTERJEE

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK SABHA STARRED QUESTION NO.47 TO BE ANSWERED ON 20 TH  JULY, 2016

## REVIVAL PLAN OF TELECOM PSUs

- †*47.  SHRI LAXMAN GILUWA: SHRI J.J.T. NATTERJEE:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) whether  the  State-run  telecom  firms  BSNL  and  MTNL  have  incurred  huge losses whereas private companies are earning handsome profits;
- (b) if so, the details thereof during last three years and the reasons for the same, company-wise;
- (c) whether the Government has proposed revival plans for BSNL and MTNL;
- (d) if so, the details thereof and the reaction of the Government thereto; and
- (e) whether  BSNL  and  MTNL  are  allowed  to  monetize  their  assets  by  sharing towers, optical fibres, renting out buildings, etc. and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS & MINISTER OF STATE IN THE MINISTRY OF RAILWAYS (SHRI MANOJ SINHA)

- (a) to (e) A Statement is laid on the Table of the House.

STATEMENT  TO  BE  LAID  ON  THE  TABLE  OF  THE  LOK  SABHA  IN  RESPECT  OF PARTS (a) TO (e) OF LOK  SABHA STARRED QUESTION NO. 47  FOR 20 th  JULY, 2016 REGARDING 'REVIVAL PLAN OF TELECOM PSUs'.

(a)&(b) Details of profit & losses of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited  (MTNL) during the last three years are given below:

| Name of Operator   | Profit & Loss(In Rs. Crores)   | Profit & Loss(In Rs. Crores)   | Profit & Loss(In Rs. Crores)   |
|--------------------|--------------------------------|--------------------------------|--------------------------------|
|                    | 2013-14                        | 2014-15                        | 2015-16                        |
| BSNL               | (7020)                         | (8234)                         | (3803) (unaudited)             |
| MTNL               | 7825*                          | (2893)                         | (2006)                         |

*   MTNL made book profit of 7825.13 crores during FY 2013-14. The same was on account of reversal of provisions of pensionary benefits following Government of India decision for payment of the pension from its own sources and also the reversal of amortisation charged earlier for one time Broadband Wireless Access (BWA) spectrum due to return of BWA Spectrum by MTNL.

The main reasons of incurring losses by BSNL and MTNL are as follows:

- /head2right Huge legacy work force whose salary & wages are around 50% of the revenue in case of BSNL and to the extent of 70% of revenue in case of MTNL.
- /head2right Inheritance of legacy wire-line systems.
- /head2right Economically unviable rural operations as social obligation.
- /head2right Increase in operational cost.
- /head2right In case of MTNL additional burden as interest due to payment of upfront spectrum cost of 3G and BWA.

(c)&(d) Government  is  concerned  about  the  financial  condition  of  BSNL  and MTNL. Both the PSUs were in profit till Financial Year 2008-09. Thereafter, due to declining market share the revenue realization has fallen while the operating cost has remained  almost  constant  which  has  affected  the  profitability  of  both  the  Public Sector Undertakings (PSUs).

Government has provided  financial  assistance  to  BSNL  and  MTNL  for  their revival for the following:

- /head2right Surrender  with  refund  of  BWA  spectrum  held  by  BSNL  in  6  Licensed Service Areas (LSAs) and by MTNL in Delhi and Mumbai. Under this head, Rs.  4533.97  crore  has  been  refunded  to  MTNL  through  bonds  and  Rs. 6724.51 crore is being refunded to BSNL through budgetary resources.
- /head2right Waiver of notional loan of Rs. 1411 Crore due to be paid to the Government by BSNL.
- /head2right The pension liability of MTNL for its staff who got absorbed from DoT, shall get pension from the Government at par with BSNL absorbed staff.
- /head2right Financial support of Rs. 492.26 crore has been given to MTNL on account of liability arising from levy of Minimum Alternate Tax (MAT).
- /head2right Refund  of  Rs.  458.04  crore  to  MTNL  and  Rs.  169.16  crore  to  BSNL    on account of surrender of CDMA (Code Division Multiple Access) spectrum.

In  addition,  Government  assigned  the  following  projects  of  Department  of Telecommunications  (DoT)  to  BSNL  which  will  support  BSNL  in  additional  revenue generation:

- /head2right Providing  mobile  connectivity  in  2199  identified  locations  in  Left  Wing Extremism (LWE) affected areas through BSNL at an estimated cost of Rs. 3567.58 crores.
- /head2right Providing  mobile  connectivity  to  uncovered  villages  in  Arunachal  Pradesh and two districts  of  Assam  to  BSNL  on  nomination  basis  at  an  estimated cost of Rs. 1975.38 crores.
- /head2right Implementation of transmission-media plan of North Eastern Region (NER) at an estimated cost of Rs. 295.97 crore.
- /head2right Implementation of comprehensive development plan for  Andaman  & Nicobar Island and Lakshadweep at an estimated cost of Rs. 99.03 crore.

Separately, BSNL and MTNL themselves are also making relentless efforts towards  their  revival.  Some  of  the  steps  being  taken  by  BSNL  and  MTNL  in  this direction are as follows:

## BSNL

## MTNL

- Plans to install  11,340 numbers of 3G Base Transceiver Stations (BTSs) and 13,926 numbers of 2G BTSs under Phase-VII GSM (Global System for Mobile Communication) expansion for 15 Million lines. Out of the planned BTSs, 11,242 (3G) BTSs and 13,791 (2G) BTSs have become operational as  on  31/05/2016.  This has improved  2G  and  3G network coverage and data capability of 3G network.
- 2500 Wi-Fi hotspots have been provided at 1200 locations to enable fast and seamless data connectivity.
- Implemented ERP (Enterprise Resource Planning) as one of the important IT initiatives in all circles.
- During the current Five Year Plan (2012-17), BSNL has plans to make the entire  wire  line  customer  base  network  IP  enabled.  Next  Generation Network (NGN) equipment based on the latest architecture are planned to be deployed gradually to replace the entire Circuit Switched equipments/ Digital Telephone Exchanges.
- Setup  wireline call centres  for all of its  customers  of  landline  and broadband at Dehradun, Ajmer and Bangalore.
- Launched various  customer  centric  initiatives  like  Night  free  calling  from landline  from  9:00  pm  to  7:00  am,  Free  incoming  calls  while  roaming, increased minimum speed of broadband to 2 Mbps etc.
- Based on Government policy  on Virtual  Network  Operator  (VNO),  BSNL has plans for optimum utilization of its network.
- Plans to upgrade the existing data speeds over wireless network.
- Investment for up-gradation / augmentation / expansion of existing 2G/3G network.
- Plans to provide the backhaul media connectivity of existing mobile tower sites in Delhi and Mumbai on Optical Fibre Cable (OFC) network in place of Microwave network.
- MTNL is also exploring synergy with BSNL for its mobile services.

- Set  up  of  wireline  call  centers  for  the  customers  of  landline,  mobile  and broadband at Delhi and Mumbai.
- Launched Night free calling from landline from 10:00 pm to 7:00 am.
- To reduce call drops steps such as revised frequency plan, testing with IP Tool, reinforcing of network, etc. have been undertaken.
- MTNL  has  plans  for  optimum  utilization  of  its  network  based  on  Virtual Network Operator (VNO) policy.
- Enhancement  of  broadband  speed  from  512  Kbps  to  2  Mbps  for  better satisfaction of customers.
- Rollout of Wi Fi facility to provide broadband service
- Generation of additional revenue through sharing of passive infrastructure.
- Sharing  of  Optical  Fibre  Cable  (OFC)  infrastructure  with  private  telecom service providers.

(e) BSNL and MTNL are  sharing their  passive  infrastructure  on  availability  basis and  their  towers  with  other  telecom  service  providers  (TSPs)  based  on  techno economical  considerations.  During  2015-16,  revenue  of  Rs.146  crore  has  been earned by MTNL by lease rental of under utilized assets i.e. building etc.

*****