The state-owned ‘Telecom Service Providers’, BSNL & MTNL have been in losses for more than a decade now. Multiple reasons have been mentioned for their state of affairs, especially after a decade of phenomenal rise in mobile subscribers. The latest data indicates that their losses have reduced in 2020-21 mainly on account of the VRS implemented last year. Here is a review. Mahanagar Telephone Nigam Limited (MTNL) is a Public Sector Undertaking of the Government of India under the Ministry of Communications that provides telephony services in Delhi and Mumbai circles. Bharath Sanchar Nigam Limited (BSNL) which is also a Public Sector Undertaking is 100% owned by the Government of India and provides telecom services in the rest of the country excluding Delhi and Mumbai. MTNL was set up in 1986 while BSNL was formed in the year 2000. Both these PSUs have been in news for the last couple of years following the government’s efforts and debates around their revival as both these entities have been making losses for many years now. BSNL has been in losses for more than a decade BSNL, which was one of the best performing PSUs in the country at one point of time has lost its sheen in the latter half of the 2000s. It continued to make profits until 2008-09. However, since then, BSNL has continuously recorded losses despite the massive growth in the telecommunication industry. This may be attributed to the emergence of strong private players who are providing better service at a lower cost, thereby providing stiff competition to the state-owned entity. Currently, there are only four players in the Indian mobile communication market including three private players (Airtel, Reliance, and Vodafone Idea) and the government combine of BSNL/MTNL. BSNL’s loss was Rs. 6,384 crores in 2010-11, according to data presented in the Lok Sabha recently. In the subsequent year 2011-12, the loss further increased to Rs. 8,851 crores and dropped to Rs. 4,793 crores in 2016-17. In 2017-18, the loss reported by BSNL was Rs. 7,993 crores which increased to Rs.14,904 crores in 2018-19 (an increase of 86%) and further rose to Rs.15,500 crores in 2019-20 (increase in losses by 94% as compared to 2017-18). As of 30 September 2020, BSNL has reported a loss of Rs. 3,607 crores (provisional). However, the expenditure in 2020-21 so far has been only Rs. 12,368 crores in contrast to an average expenditure of Rs. 35,500 crores in the previous years, largely on account of the reduction in the staff numbers following the Voluntary Retirement Scheme (VRS) by which nearly 50% workforce of BSNL and 75% of MTNL were reduced. Similarly, MTNL has also faced continuous losses. From a loss of Rs. 2,802 crores in 2010-11, the loss increased to Rs. 5,321 crores in 2012-13, the highest reported loss so far during this decade. However, in 2013-14, MTNL reported a profit of Rs. 7,825 crores- the only time it reported a profit in this decade. Since then, MTNL has reported losses that have increased with each year. In 2015-16, MTNL’s loss was Rs. 2,006 crores which increased to Rs. 3,398 crores in 2018-19. Provisional statistics for 2020-21 up to 30 September 2020 reveal a loss of Rs. 1,220 crores for MTNL (for an expenditure of Rs. 2,111 crores). The government in a recent press release mentioned that the reasons for better performance or reduction in losses in 2020-21 for both BSNL & MTNL include a sharp reduction in wage bill due to Voluntary Retirement Scheme. The government also stated that BSNL was able to maintain its revenue and cut down on other costs. Poor performance of PSU because of employees lacking required skills A parliamentary standing committee report of 2015 that reviewed the performance of BSNL & MTNL noted many reasons for the poor financial performance of these organizations. Among other reasons, one of the reasons cited for the poor performance is the skillset of employees. It was stated that the skills of the employees were not suited for rendering services to Mobile and Broadband customers which is quite different than that required for wireline services. The report also mentioned the decline in wirelines business, stiff competition in the mobile sector, legacy systems, and gap in sales & marketing as the reasons for the poor performance of these PSUs. Revival plan worth Rs. 69,000 crores were approved by Union Cabinet in 2019 In October 2019, the Union Cabinet approved a revival package for BSNL and MTNL worth Rs. 69,000 crores.