Vendors hit by BSNL and MTNL non-payment

Vendors hit by BSNL and MTNL non-payment

Recent reports from the Indian press indicate that some vendors that have sold goods or services to BSNL and MTNL are considering insolvency pleas against the state-run operators after non-payment of dues.

The debts are estimated to be around $2.8 billion, and appear to involve telecommunications kit and other goods or services sold to BSNL and MTNL.

With vendors under pressure from their own banks there has even been a claim that close 100,000 jobs in the domestic telecommunications sector could be at risk. At the very least, it seems a number of Indian firms, unable to maintain employment levels (and in some cases actually pay employees), may have to consider job cuts. Meanwhile BSNL staff salaries are still being paid, even though some private sector suppliers have been waiting nearly a year for moneys owed to them.

According to Indian press reports, over 1,100 complaints have been filed by firms against BSNL to recover dues, among the highest any public sector company has received.

The question is now whether a protest, planned for 19 November, will force the two companies to pay up, or whether India’s National Company Law Tribunal will be asked to wind up both BSNL and MTNL.

This comes against the backdrop of last month’s agreement in cabinet of a massive revival package, estimated at about $9.7bn, for BSNL and MTNL. The plan involves merging the two loss-making firms, monetising their assets and offering a voluntary retirement scheme to employees, with the aim of making the new entity profitable within two years.

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