A serious problem is staring at the government in general and telecom minister Kapil Sibal in particular—a problem that the New Telecom Policy 2011 will not be able to address. Come next June, the state-owned BSNL would not have money to pay salaries to its nearly 2.8 lakh employees, and if the government wants to avert this crisis, it needs to expeditiously draft and clear a voluntary retirement scheme (VRS) for roughly 1 lakh employees of the PSU. The government can do its arithmetic, but back of the envelope calculations show that it would have to shell out around R15,000-18,000 crore to fund this
VRS programme.Is it ready to cough up this kind of money? One does not know, but what is certain is that come next June, a bailout would become necessary for the company. This is the economics of the company—which is not listed and so does not come out with quarterly results, and its earnings for the fiscal 2010-11 are yet to be officially announced. However, officials say that its net loss for the year stands at R6,384 crore. Add to this a net loss of around R400 crore that the company is understood to have posted in the April-June period of the current fiscal. Since July, the yearly R2,000 crore it used to get from the Universal Service Obligation Fund in lieu of the discontinued access deficit charge has also stopped. This means during the current fiscal the company is losing around R25 crore each day and R750 crore each month! How is the company, then, still managing operations? The answer is simple: by dipping into its cash and depreciation reserves. But this will also not last long and, therefore, the deadline of June 2012. BSNL had huge cash reserves of around R30,000 crore. However, last year’s 3G and broadband wireless spectrum auction cost it dear. It had to dip into it to pay for them—an exorbitant R18,500 crore. It is now left with some R5,000 crore, which would enable it to last a maximum till June next year. Column : Nine months more for BSNL
