BSNL: Struggling To Stay Connected

Telecommunication is one of the most important sectors of any economy. It empowers a nation to stay connected. Without telecommunications, it would have been physically impossible to transfer information and knowledge. Currently, India is the world’s second-largest telecommunications market with a customer base of 1.2 billion. Nearly seventy per cent of the population lives in rural regions and approximately 58% have access to network (as on July, 2018). These rural regions are a huge opportunity for the telecommunication sector to tap. The subscribers have only increased in the past decade and a half. In today’s world, data is what matters, whoever can provide faster data at a cheaper rate, wins the race. In the telecommunications market, there is rigorous competition between the private and public players. 

Bharat Sanchar Nigam Limited is a Public Sector Undertaking (PSU). Once what used to be one of the main players in the telecom sector, providing services to the majority of the customers in the country is now a debt-ridden organization. Losses of over Rs.90,000 crores are not incurred overnight or in the course of a few years. These losses on account of this particular PSU have been accumulated over a decade. Even though the company had been running in negative numbers throughout the last decade, never had it witnessed default of the employee’s salary. It came as a shock to all the 1.68 lakh (approximate) employees when their salaries were delayed not once, but a couple of times during the year 2019. It was so appalling for some that a few suicide cases have been reported, citing not being compensated as the reason to end their lives. These consequences cannot be blamed on one person, it has been a series of decisions that have led this organization to sink.

To touch upon the reasons why the organization went down in flames, let’s look at some of the bad decisions made by the organization. Starting in 2008, BSNL paid about Rs. 18,500 crores in the spectrum auction for 2G and 3G. Also, the 2.5GHz band telecommunications spectrum was provided to BSNL and sister organization MTNL (Mahanagar Telephone Nigam Limited) by the Government. Later when the auction was open to private counterparts, they lobbied the Government into buying the more efficient spectrum (2.3GHz band). The next year BSNL reported a loss for the first time in its history of operations.

Similarly, in 2009 when it was given the option of choosing the type of technology to be used for its wireless broadband services, BSNL chose Worldwide Interoperability for Microwave Access (WiMAX), which is an inferior technology when compared to the one chosen by its competitors (Long Term Evolution). BSNL’s main competitors include Airtel, Vodafone, and Jio. In 2014,

after the aggravating losses, BSNL had to surrender its spectrum rights to the Government and had to ask for a refund. For the refund Government prepared a ‘revival’ package in which the money would’ve been returned over some time. Due to the surrendering of spectrum rights and increasing losses, BSNL had to downsize its technological assets. The timing could not have been worse, that was the time when most of its competitors were investing in advanced 4G technology. 

These decisions point to the fact that BSNL’s choices are highly political. Apart from these decisions being too political, BSNL has some other issue to tackle too like overstaffing. BSNL has well over 1.6 lakh employees, but its competitors (private players) have about 30-40 thousand employees. Over staffing leads to excessive costs and in this case restructuring the organization would be a very tedious task and very expensive too. 

Currently, telecom service providers are investing in 5G technology, and it’s not far when it shall be rolled out, but BSNL is still struggling to introduce 4G. Let alone introducing 4G, BSNL’s services are not up to the mark, this is due to inadequate availability of quality equipment and BSNL not being able to grasp the market pattern. They don’t believe in prioritizing profit/loss figures or market share as much as their private counterparts.

To stabilize the organization’s present condition, it has been proposed to sell some of the land held by it. During the estimation of the cost of land, it was discovered that the land was highly undervalued considering it is in prime locations of the country. Other measures of saving the organization include outsourcing work which includes optical fiber cable maintenance work to cable repair work. Another step to reduce the operating cost is by saving on power. The Telecom Department is preparing a rescue plan for BSNL and MTNL, consisting of voluntary retirement schemes, asset monetization and allocation of the 4G spectrum.

Since BSNL is a Government organization, it cannot be neglected that failing was its obvious fate. Most Government entities don’t prioritize profits leading them into deep debt. All the wrong decisions regarding the type of technology used and downsizing technological assets have culminated in the big mess it is now.  Also, stressing over the fact that it is a PSU, the choices made by the company are highly political. Everyone is aware of how filthy politics can get and its effects. Another reason for the downfall which should not be forgotten is overstaffing, it adds major cost to the company and has driven the company into heavy losses.

Even after considering all these facts, BSNL has not been privatized. The main reason being, to fulfil civic agendas, with the main one being able to provide internet access to rural regions of the country. Even though BSNL may be going downhill, but it has served the nation. For BSNL to emerge strong and repay its debt there has to sufficient investment and a strategic vision to lead it forward. BSNL will have to adapt to the new market and its needs and it shall be a market leader once again! 

Author: Priya Gupta
B.Sc. Economics (Hons.) Symbiosis Schoo Of Economics

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