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Rediff News  All News  » Business » Ministerial group to take a call on BSNL divestment

Ministerial group to take a call on BSNL divestment

Last updated on: April 08, 2010 02:06 IST

The government is likely to set up a Group of Ministers (GOM) to take a final decision on divesting stake in the telecommunications company, Bharat Sanchar Nigam Ltd. It may also refer the issue to the existing empowered GOM (eGOM) chaired by Finance minister Pranab Mukherjee, for vacation of spectrum for third-generation (3G) telecom services.

Communications minister A Raja recently met Prime Minister Manmohan Singh and proposed the formation of a GoM or a reference to the eGOM, confirmed a senior official of the department of telecommunications.

"The prime minister is considering the proposals. A decision will be taken soon," the official said.

Last month, a committee headed by Sam Pitroda -- advisor to prime minister Manmohan Singh -- had recommended divestment of 30 percent of the government's stake in the company, in phases.

BSNL is currently wholly owned by the government.

Pitroda had also recommended sweeping restructuring of the organisation, which would involve reduction of the 3,50,000 strong work force of the company by 1,00,000 through a voluntary retirement scheme. The employee unions are strongly against such a move.

The GOM or the eGOM would also take a final decision on the restructuring recommendations of the Sam Pitroda committee.

Pitroda had also suggested BSNL scrap the existing 93-million GSM line order and go for an outsourcing of network management, which is followed by competing private sector telecom companies like Bharti Airtel.

The Pitroda committee was responding to increased completion faced by BSNL, which had eroded its market share in the mobile space to 12 percent from a high of over 20 percent. The company is expected to make losses for the first time in 2009-10.

For the nine months ended December, BSNL made a profit of merely Rs 175 crore, but had to pay out about Rs 3,700 crore as arrears of wages. 

The BSNL board has already cancelled the 93-million GSM line contract and given in principle approval for divestment of equity in the corporation. It also accepted the recommendation to go in for a VRS.

However, the board had come under fire from the unions who are going on a strike from April 12 against Pitroda's recommendations. They are also protesting the board's acceptance of the proposals without any discussions. 

Kuldeep Goyal, chairman of BSNL said he would go in for discussions with the unions only after the government takes a final decision. "A final decision on divestment, as well as VRS, has to be taken by DoT Once they do that, we will talk to the unions".

The unions had been successful earlier in derailing BSNL's plans to go in for public offer. Despite cabinet approval to divest 10 percent in BSNL two years ago, opposition from unions ensured the divestment was stalled and the government decided to shelve the proposal.
Mansi Taneja in New Delhi