Government to transfer 3,000 MTNL employees to BSNL amid financial crisis

The Indian government is taking steps to address the ongoing financial crisis at Mahanagar Telephone Nigam Limited (MTNL), a state-run telecom company operating in Delhi and Mumbai. In a bid to reduce operational costs and manage the severe debt MTNL faces, the government is reportedly planning to transfer around 3,000 employees to Bharat Sanchar Nigam Limited (BSNL) and the Department of Telecommunications (DoT). Additionally, a voluntary retirement scheme (VRS) is being considered to further streamline the workforce.

MTNL's employee costs, including salaries and other benefits, have escalated to 78% of its operating revenue, which was reported at Rs 728.5 crore for the fiscal year 2023-24. The company’s financial struggles are further compounded by a massive debt burden, standing at Rs 31,944.51 crore, of which Rs 7,873.52 crore is owed to banks. Despite multiple revival packages, MTNL has been unable to stabilise its financial health and has defaulted on various payments.

The plan to shift MTNL’s employees to BSNL and DoT comes as part of a larger restructuring initiative to reduce costs and manage the telecom company’s debt more efficiently. The government is also exploring options to transfer MTNL’s operations to BSNL without formally merging the two entities. A service agreement is currently in the works to hand over MTNL’s operations to BSNL, allowing the latter to manage MTNL’s services while avoiding the complexities of a merger.

BSNL has already been managing MTNL’s mobile networks for several years, and the Department of Telecommunications has confirmed that BSNL is testing 5G in various parts of the country, including Delhi. MTNL's employees, however, have raised concerns about potential deputations outside their service areas of Delhi and Mumbai, which they believe would lead to unrest if carried out without consent. They have also requested promotions on par with BSNL employees to avoid hierarchical imbalances.

The government has been actively working to address MTNL’s debt and financial issues, with the aim of making BSNL a profitable venture, while restructuring MTNL as a backend brand.