Government announces VRS plan after BSNL-MTNL merger
In order to revive the PSU telecom bodies, BSNL and MTNL, the government has decided to merge the two telcos. As part of the revival package, MTNL will be merged with BSNL. Pending this, MTNL will act as a subsidiary of BSNL. MTNL is listed but has its net worth already eroded. BSNL is unlisted. BSNL is unlisted.
The government has come up with a four step revival plan which also includes offering employees of both the subsidiaries a Voluntary Retirement Scheme (VRS). Giving an example of the VRS package, telecom minister Ravi Shankar Prasad shared in media, “Any employee above the age of 53 and half, who opts for the VRS, will be given 125 percent remuneration of the salary, pension and gratuity till the age of 60.”
BSNL and MTNL are ailing through high loss. In fact, BSNL, which was once a Navatna company, has accumulated losses of more than Rs.90, 000 crore. This is the consequence of BSNL's inability to compete with nimble and more efficient private players like Reliance Jio and Bharti Airtel. With a bloated workforce of 176,000, BSNL is simply uncompetitive.
According to various market experts, the cause of BSNL and MTNL loss can be contributed to employees with who have resisted change during the disruptive times in the telecom industry.
Independent market expert Ambareesh Baliga shared in media, “The biggest issue with both BSNL and MTNL, is the employees belonging to the ‘monopoly’ era. It is difficult to change the mindset to suit today’s ultra-competitive environment; that has been one of the major reasons for their decline.”
The current status on BSNL and MTNL is a clear case of why changing corporate culture is a critical component of success for business. There is a pragmatic economic need, where financial results will be compromised in a fast-changing environment unless the cultural status quo is broken.