BSNL freezes em­ployee ben­e­fits, plans VRS pack­age

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - Mansi Taneja [email protected]­dia.net

Our fo­cus is pre­serv­ing mar­ket share. With our em­ployee costs be­ing so high, it had be­come dif­fi­cult to re­main in pos­i­tive ter­ri­tory

Anu­pam Shri­vas­tava,

New Delhi: State-run tele­com player BSNL has frozen its em­ployee ben­e­fits and is un­der­tak­ing other mea­sures to cut down its ex­pen­di­ture dras­ti­cally, aim­ing to sus­tain it­self in the cur­rent mar­ket sce­nario, its chair­man and man­ag­ing di­rec­tor Anu­pam Shri­vas­tava told DNA Money.

With all the cost cut­ting ex­er­ci­ces put to­gether, the com­pany has been able to save Rs 2,500 crore last year and a sim­i­lar amount is ex­pected to be saved in the on­go­ing fis­cal.

Out of Rs 2,500 crore sav­ings an­nu­ally, one fourth i.e, Rs 625 crore are em­ployee ben­e­fits. BSNL has been strug­gling to man­age its fi­nan­cials be­cause of a huge em­ployee base that stands at around 1.8 lakh with an­nual ex­penses of Rs 15,000 crore.

BSNL has also sub­mit­ted a pre­lim­i­nary re­port by IIM Ahmed­abad for the re­vival of the com­pany. A fi­nal re­port will be sub­mit­ted soon. Among other mea­sures, the re­port sug­gests giv­ing VRS (vol­un­tary re­tire­ment scheme) to about 35,000 em­ploy­ees at a cost of Rs 13,000 crore.

“We are cut­ting costs in terms of elec­tric­ity, ad­min­is­tra­tive ex­penses and freez­ing our em­ployee ben­e­fits. For the time be­ing, we are not giv­ing any LTC (leave travel con­ces­sion) ben­e­fits, etc. The med­i­cal ex­penses are also be­ing con­trolled,” Shri­vas­tava said.

“We are work­ing on var­i­ous mod­els on how to meet the costs (for VRS pack­age), it could ei­ther come from the govern­ment sup­port or through a soft loan. All these modal­i­ties are be­ing worked on,” he said.

One of the big­gest chal­lenges for BSNL has been its large work­force. Even with the change in tech­nol­ogy, the head­count stands has been on a higher side. While other tele­com play­ers have about 25,000-30,000 em­ploy­ees, BSNL has over five times that num­ber.

When asked if there have been protests from em­ploy­ees on this move, he said, for­tu­nately, em­ploy­ees have come for­ward on their own. “They said if you (BSNL) have to re­ally sur­vive, we need have to do var­i­ous such ac­tiv­i­ties to en­sure that com­pany survives the tur­moil in the mar­ket and ben­e­fits to em­ploy­ees can

CMD, BSNL come when the com­pany is prof­itable.”

The en­try of Reliance Jio in the tele­com space in late 2016 has pushed the fi­nan­cials of in­cum­bents, in­clud­ing that of BSNL, on a down­ward spi­ral, apart from trig­ger­ing a con­sol­i­da­tion phase in the in­dus­try where now only three pri­vate play­ers are left along with BSNL/ MTNL. BSNL and MTNL have been post­ing losses and strug­gling to sur­vive in a hy­per-com­pet­i­tive mar­ket.

Ac­cord­ing to Tele­com Reg­u­la­tory Author­ity of In­dia’s data for July-septem­ber 2018 quar­ter, bar­ring Reliance Jio, all the tele­com play­ers posted a fall in AGR (ad­justed gross rev­enues) from ac­cess ser­vices. Voda­fone Idea re­ported a de­cline of 8.49% at Rs 7,528.37

crore, Bharti Air­tel saw a dip of 1.31% at Rs 6,720.88 crore and BSNL recorded a 15.32% drop at Rs 1,925.33.

With de­clin­ing av­er­age rev­enue per user and prof­itabil­ity, the tele­com play­ers are con­stantly look­ing at ways to find new streams of rev­enues and sav­ing costs.

“Our fo­cus is pre­serv­ing mar­ket share. In the in­dus­try, a trend al­ways comes where you have to pre­serve your mar­ket share and take a hit on your fi­nan­cials. So last year, we went ahead with this strat­egy of pre­serv­ing the mar­ket share and match tar­iffs with the com­pe­ti­tion. As a re­sult, we have taken a hit on our fi­nan­cials and with our em­ployee costs be­ing so high, it had be­come re­ally dif­fi­cult to re­main in pos­i­tive ter­ri­tory. Last year, we also booked losses,” he said.

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