BSNL – The Inevitable Fall Of A Telecom Giant!

The central issue surrounding various loss making PSUs is the pro-corporate policies of the last decade, with little emphasis on strengthening or upgrading strategic public organisations like BSNL & others

It was on 15th September, 2000 that the then incumbent NDA government decided to merge Telecom & Telegraph services in India and carve out a new entity, presently known as BSNL from the erstwhile Central Government Departments of Telecom Services (DTS) & Telecom Operations (DTO). Consequentially, the move provided two avenues for its employees to either be a part of this newly created PSU or to stay within the core departmental wings of DoT. With no imminent market threats looming the telecom industry in the early 2000s & the visibly possible salary gains on cards, prompted a majority employees of DTS & DTO to get absorbed in BSNL. Fast forwarding 19 years from there and we see a complete volte face in the telecom sector with majority of them feeling the heat of stiff market competition & the impending perils of low cash reserves for running operations.

BSNL

Ironically, for nearly a decade till 2009, BSNL’s successful advertising campaigns with the popular tagline “Hindustan Bol Raha Hai”, substantiated its rapidly increasing customer base & also validated for its revenue generating capabilities. Fatefully, this dream profit run for BSNL was halted in the year 2010 when under the garb of providing a level playing field for both public & private telecom players, the then Manmohan Singh led UPA government dragged BSNL into the 3G spectrum auctions. This policy shift left BSNL with no other choice than to pay a whopping US $ 2.5 billion from its exchequer for its allocated 3G band spectrum, thereby crippling its financial health beyond repair and also setting tone for its future demise. As a wholly owned Government undertaking, BSNL has been subjected to both bureaucratic & political meddling at every level by both UPA & NDA governments. With an allowed 100 percent FDI cap, the telecom industry is vulnerable to cut throat market competition & unarguably, stands as one of the most strained business sectors in India today.

Despite finding strangulated by private players in the fierce tariff wars & facing technological handicaps internally, with no 4G mobile services at its disposal, BSNL has still managed to retain & to even increase its customer base in the last quarter of this financial year.  Unlike telecom biggies like Airtel or Vodafone-Idea, whose numbers have fallen considerably due to Jio’s predatory pricing models, it is only the state run BSNL which has shown an impressive resilience to the same.

The central issue surrounding various loss making PSUs in the country is the pro-corporate policies opted by Governments in the last decade, with little emphasis being given to strengthen or to upgrade strategic public organisations like BSNL & others. Within a period of mere four years after its launch in 2015, Reliance Jio is now nearing to monopolise the telecom industry in India and is emerging as the only heavyweight in the mobile communication arena. It is therefore a sine quo non for the Modi Government to recuperate BSNL from its present state of financial despair & to help in building a healthy market competition to possibly avoid any unreasonable voice/data price rise in future. Undeniably, Government’s hand in glove tendency of selectively favouring big corporate houses like Reliance Jio, has badly hurt the entire telecom landscape with all major telecom giants suffering mega losses.

Presently, BSNL has amassed a cumulative FY2009-19 EBIT loss of Rs. 90000 crores but its debt of Rs. 14000 crores stands lowest amongst all its competitors. Ostensibly, the so called revival options including a bailout package, VRS scheme & lowering of retirement age etc. are being mulled over by the Modi regime in order to resuscitate BSNL operationally but clearly, a firm governmental intent to set things right for the ailing PSU seems missing. Although, largely, BSNL’s majority woes have been orchestrated due to the prevailing market challenges but the genesis of its deteriorating revenue condition partly also lies in its poor internal management & lack of effective leadership at all levels. Currently, the leadership positions within BSNL are held by erstwhile ITS officers from DoT, who did not opt to get absorbed in BSNL at the time of its formation and are on deemed deputation for the last 19 years. Therefore, with not much at stake for them, the fate of BSNL’s decline or rise is of little concern for these officers holding leadership positions. Thus, there is an utmost need for BSNL to carry out an organisational restructuring at the operational levels and also, in conjunction to that have an independently run management which breeds either from within or is laterally absorbed in the organisation.

 

Pursuing a masters course at IIT Mandi, Akshay Thakur has worked as a solutions design consultant with Tata Communications

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