BSNL hasn’t been able to get out of cumulative losses every year. The revival package which is expected to infuse some more capital into BSNL is not the only thing needed.
It did not come as a surprise when the NDA led government announced a revival package of 69,000 crore to the State run telecom service providers BSNL [Bharat Sanchar Nigam Limited] and MTNL [Mahanagar Telephone Nigam Limited ]. Although BSNL has a market of 10.5 million, according to Telecom Regulatory Authority of India, the financial situation of the PSU is worsening every year.
If that is not enough, BSNL has not launched its 4G services yet whereas the private players have done it long ago in 2016. They have captured a large chunk of market while BSNL and MTNL struggle to come out of losses. MTNL incurred, in nine out of ten years, losses and BSNL has not been making profits since 2010. In a bid to cut the outflow of money, the organisation has started the Voluntary Retirement Scheme which was availed by around 97,000 employees, according to the Economic Times. It plans to save 8,800 crore out of this move. BSNL and MTNL also plan to sell their assets worth of 36,000 crore. It is not only sad but concerning when we look at the state of affairs in the organisation.
When the world is looking at 5G, the state run service is now inviting tenders to start 4G services. Notably, the Department for Promotion of Industry and Internal Trade [DPIIT] has asked the telecom department and BSNL to put a hold on the tender process after allegations of BSNL favouring foreign firms emerged. The tenders are valued at Rs.9000 crore. The Telecom Equipment and Services Export Council [TPEC], a government body responsible for promotion of domestic products has raised this issue with the DPIIT.
BSNL – Continuing Saga
The company has a number of problems. From delayed modernisations to high costs on employees, everything has contributed to BSNL’s downfall in its own way.
The revenues took a dip of 14% in the financial year 2017-18 and stood at Rs.27, 818 Crore. From Rs.4,500 Cr in 2016-2017 to 7,992 Cr in 2017-18, the losses increased too. At the end of 2018, according to a report by Kotak Institutional Equities, BSNL had operating losses of 90,000 crore. While the three main players of the telecom segment, Bharti Airtel, Reliance Jio and Vodafone Idea own 80% of the telecom spectrum in the country, BSNL struggles with poor connectivity, lack of modern technology. Apart from these, the organisations employ 1.8 lakh people which is 6 times more than the average employees its rivals have. Although measures like freezing employee benefits saved money to an extent, they do not give a viable solution to the ailing PSU. There are allegations that the PSU is deliberately being side-lined to help private players gain larger market and get higher returns.
BSNL – Current Situation
Amidst all this crisis and the stalling of tender process by DIIPT, the All Union and Associations of BSNL[AUAB] has a written a letter to Prime Minister Narendra Modi, alleging that parties with vested interests are slowing down the tender process. The Unions argues, collectively, in the letter that BSNL is unfairly being asked to prefer domestic vendors. They have put forward following points as to why BSNL should be allowed to have business with foreign entities.
- BSNL cannot afford to procure sub-standard equipments from inexperienced companies, not having proven technology.
- The Indian players do not have experience in managing large mobile networks, even if they have developed 4G technology. Further, the quality standards of their equipments have not been tested.
- It will be unfair to direct BSNL alone to buy local 4G equipments, which are largely untested, while letting the private players to provide services with equipments supplied by global giants like Nokia, Ericsson, Huawei, Samsung, etc.
- All the private operators such as Reliance Jio, Airtel and Vodafone Idea are procuring their 4G equipments not from any domestic vendor. Why should BSNL alone be compelled to procure substandard equipments, manufactured by inexperienced vendors, in the name of “Make in India” policy.
- Since BSNL is not supported from USO Fund, or funded by the Govt. of India for this project and tender, they do not come under the purview of “Make in India” policy, as per the PMI guidelines.
In a more recent development, it was reported by the Hindu that BSNL is planning to extend the last fate for tenders to May 25th. It is because of a low participation rate from the companies and also because of the investigation which is being done by Ministry of Commerce with regards to the allegations as discussed above concerning the tender process. Time shall tell whether BSNL will be case study to success or a story to bury in the records.