Logo of Bharat Sanchar Nigam Ltd (BSNL) painted on a wall outside its office in Kolkata
A woman walks past a logo of the Bharat Sanchar Nigam Ltd (BSNL) painted on a wall outside its office in Kolkata, India. A delay in payment of July salaries to BSNL staff has intensified speculation about the timing of the public sector telecom player's privatization.REUTERS/Rupak De Chowdhuri

The failure to pay the staff of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) their salaries for July has triggered fresh speculation about the privatisation of the public sector telecom providers.

Industry observers claim the government's focus shifted to BSNL and MTNL after speeding up the privatisation procedures of national carrier Air India. The government has ordered Air India to freeze all appointments and promotions, setting the field for the privatization process.

For the first time after Prime Minister Narendra Modi swept back to power, BSNL reportedly failed to pay its 1.76 lakh employees on time. The two public sector units (PSUs) had delayed salaries for February until mid-March due to a financial crisis. The BSNL had then said that it used its internal accruals to clear the pending salaries.

The government, during its earlier stint, had held back sanction to the public sector telecom player for introducing 4G services, handing a major advantage to private-sector competitors. The government has also dithered on a decision to allow its participation in the imminent 5G trials.

While BSNL chairman and managing director PK Purwar said that employees will get the July salary this week, an employees' union leader said that no information had been shared by the management about early salary payment, according to PTI.

"Salary for the month of July has not come. There is also no information when will it be credited," the report quoted the All India Unions and Associations of BSNL (AUAB) convenor, P Abhimanyu, as saying.

BSNL Vodafone
BSNL has continued to lose customers to private-sector competition as delayed government decisions have blocked the updating of its services.Facebook/ Reuters

Purwar told the news agency that employees would get the salary in this week. "Funds are being arranged through internal accruals," Purwar said. BSNL has 1.76 lakh employees across the country and MTNL about 22,000 employees.

This is for the first time that the two public sector companies have defaulted on paying the staff on time after the new government took charge. 

The BSNL needs Rs 750 crore to Rs 850 crore for salaries while the MTNL needs around Rs 160 crore. The report said the MTNL Human Resource and Enterprise Business director Sunil Kumar said the company was in the process of collecting some dues after which the salary would be paid on a priority basis "very soon".