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Last Updated : Jul 03, 2017 12:34 PM IST | Source: Moneycontrol.com

DoT tells MTNL to cut retirement age to 58 before seeking VRS support

Reduction in the retirement age will automatically bring down the number of people eligible for VRS and hence save the government some cash

Mahanagar Telephone Nigam Ltd’s plan to become leaner is unlikely to fructify any time soon as the department of telecommunications has told the state-owned telecom services provider to first bring down the retirement age for its employees to 58 from 60 before seeking any support to fund a planned voluntary retirement scheme, according to an official.

According to the official, the company had sought the department’s support to initiate a VRS for its employees to bring down its staff costs—currently almost neck-to-neck with its revenues. Reduction in the retirement age will automatically bring down the number of people eligible for VRS and hence save the government some cash.

Years of losses, abetted by a lethargic and huge manpower and slow decision-making, have pulled down the MTNL’s networth into negative. Its revenues have little chance of recovering given that the market has matured and at the same time remains competitive. The company’s last annual profit was in 2008-09. Its net loss in March quarter was Rs. 634.78 crores – the lowest among the losses in the four quarters of 2016-17.

MTNL had a staff strength of 28,877 as on December 31, 2016. Of this, 4,027 were executives and 24,850 were non-executives.

At the end of last calendar year, the company had a total of 7.10 million subscribers. Of this, 3.63 million were mobile subscribers while 3.48 million were landline connections.

Compare this with Bharti Airtel Ltd, India’s largest telecom services provider, having 23,289 employees to service 364.56 million subscribers in 17 countries. Of this, it had 265.85 million mobile subscribers in India alone.

MTNL has three categories of staff employed at its office in Delhi and Mumbai. One comprises those who were recruited directly by the company. Second category includes those who came from DoT on deputation but got absorbed by the company. Third has those who are still on deputation but have not been absorbed. The VRS, as and when it comes, will cover the first two.  The third category anyway wants to go back to DoT but can’t find any recourse.

The government has explored various options in the past to revive MTNL including a merger with Bharat Sanchar Nigam Ltd. That process never took off due to the complexities in the process like MTNL being a listed entity as opposed to BSNL and higher wages at MTNL.
First Published on Jul 3, 2017 12:34 pm

tags #DoT #MTNL #VRS

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