Kapil Sibal
Kapil Sibal Reuters

Communications and information technology minister Kapil Sibal has sought Prime Minister Manmohan Singh's intervention to perk up the unprofitable state-owned telecommunication companies - Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

In a letter to the PM, Sibal said that BSNL and MNTL, which are reeling under immense pressure from the highly competitive telecom sector, need immediate intercession of various ministries.

Sibal also said that despite the implementation of many suggestions from the Sam Pitroda Committee, which was set up in 2010 to provide directives to revive the companies, BSNL and MNTL still continue to incur loss as the telecom industry has undergone many changes since then.

Considering the past fiscal year's result in this sector, Sibal noted that the net assets of MTNL would have been completely gnarled in the current fiscal year, while BSNL is expected to record a loss of ₹10,000 crore.

"Due to change in business environment and hyper competition in the telecommunications market, financial positions of BSNL and MTNL has deteriorated in last three to four years. Although the results for fiscal year 2012-13 have not yet been declared, I expect the networth of MTNL to have been completely eroded. BSNL is expected to make a loss in the range of ₹10,000 crore in the current fiscal," Sibal wrote in the letter.

MTNL which offers services in Delhi and Mumbai has been reporting losses since 2009, forcing it to lose its Navratna title. BSNL too was under constant pressure since 2004-05 when its revenue began to decline. Its profit came down to ₹6,384 crore during the 2010-11 period, from ₹10,183 crore due to salary burden and funding for the 3G and BWA spectrum auction.

According to an earlier report, BSNL is expected to lay off its employees by offering voluntary retirement. Besides the financial constraints, over-staffing and lack of skilled workforce has forced the company to make the decision.

Sibal also suggested the setting up of a ministers' committee to look into the matter. "Immediate action together with financial support would be required to put these PSUs back on track," he said.