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BSNL takes drastic steps to stay afloat; cuts employee benefits, plans VRS package

In 2018, BSNL had saved Rs 2,500 crore through a similar cost cutting exercise and it would be hoping for something similar this year too

BSNL takes drastic steps to stay afloat; cuts employee benefits, plans VRS package

Bharat Sanchar Nigam Limited (BSNL) has taken several drastic steps to cut down its expenses in order to survive in India's cut throat telecom sector. The state-run telecom operator has frozen employee benefits. This isn't the first time BSNL is undertaking cost cutting measures. In 2018, BSNL had saved Rs 2,500 crore through a similar cost cutting exercise and it would be hoping for something similar this year too. Out of the money saved by BSNL last year, Rs 625 crore was employee benefits.

BSNL employs 1.8 lakh people which is six times the number of people employed by its competitors who have around 25,000 to 30,000 employees.  Anupam Shrivastava, BSNL chairman and managing director, told DNA Money, "We are cutting costs in terms of electricity, administrative expenses and freezing our employee benefits. For the time being, we are not giving any LTC (leave travel concession) benefits, etc. The medical expenses are also being controlled."

In order to manage its financials and revive the company, BSNL has submitted a preliminary report by IIM- Ahmadabad. The report has suggested granting voluntary retirement scheme (VRS) as one of the measures. The move would affect around 35,000 employees at a cost of Rs 13,000 crore.

"We are working on various models on how to meet the costs (for VRS package), it could either come from the government support or through a soft loan. All these modalities are being worked on," BSNL Chairman and Managing Director Anupam Shrivastava said.

BSNL has been posting losses post the entry of Reliance Jio in 2016. The sector has also witnessed consolidation and only three private players have been left in the Indian market. Reliance Jio, Bharti Airtel and Vodafone Idea account for more than 90% of revenue and 80% of spectrum holding. With falling ARPU and profitability, BSNL is looking to find new ways of staying afloat by saving costs and finding new sources of revenue.

"Our focus is preserving market share. In the industry, a trend always comes where you have to preserve your market share and take a hit on your financials. So last year, we went ahead with this strategy of preserving the market share and match tariffs with the competition. As a result, we have taken a hit on our financials and with our employee costs being so high, it had become really difficult to remain in positive territory. Last year, we also booked losses," he said.

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