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BSNL’s deep-rooted problems and its revival


What ails BSNL?

BSNL’s revenues were nearly ₹40,000 crore in March 2007, while Airtel’s revenues were only ₹18,420 crore. By 2009, BSNL’s profits had nosedived 81 per cent and revenues fell 6 per cent even as Airtel’s revenues grew by over ₹10,000 crore during 2008-09 and its profits increased to ₹7,859 crore. BSNL has run up losses of ₹50,000 crore over the last five years.

The once dominant public sector company has been reduced to a mere footnote, thanks to years of political interference and typical bureaucratic style functioning. The new paradigm in telecom is data; and here, whoever gives the best experience will emerge the winner.

This experience is driven by device, content, access, application, storage, and security. This is a world that will survive on millennial consumption, which would be a large part of the market. Operators who are quick to understand consumer demands, and nimbly cater to them, will win. BSNL does not have a culture that puts customers at the centre.

Have there been attempts earlier to revive this government-owned telecom provider?

There have been many attempts earlier to improve BSNL’s operations. For example, a committee headed by Sam Pitroda offered a 15-point plan to turn around the PSU, including trimming staff, divesting 30 per cent, adopting a managed services model for its various operations, and inducting a chief executive from the private sector. This plan has not been acted upon.

The Centre has also given financial aid to BSNL in the form of refunds on spectrum payments, soft loans, and grants to keep the struggling public sector company afloat. In 2019, the Centre had announced a ₹70,000 crore revival package in a bid to help the PSU survive.

Why did they fail?

No revival plan can succeed by just pumping in money. BSNL’s biggest problem is that it is beset with layers of decision making. This makes it a slow mover in a market which has the likes of Reliance Jio and Airtel. For example, the PSU still buys equipment through tenders where the lowest bidder wins. The best vendors in technology are not the cheapest.

Will the latest attempt involving a massive fund infusion of ₹1.64 lakh crore work? Is funding the only issue here?

If BSNL wants to succeed, then it needs leaders with integrity who can establish transparent and effective governance policies. The Centre should also allow such leaders to be independent and take strategic decisions to transform the company. Employees who cannot align with the new realities of the telecom world need to exit.

Marketing executives who cannot think of a customer-centric approach, technicians and engineers who cannot innovate for the future, staff who are occupying redundant positions, and top executives who cannot steer the company’s turnaround plan have no place.

The Centre has promised to hold BSNL accountable for improving revenues and changing the mindset to become customer focussed. BSNL has partnered with a training firm to ensure that 30,000 staff are geared towards making its customers happy.

Is it important for BSNL to revive and thrive?

India’s telecom consumers need BSNL as an effective counter to the fast-emerging duopoly in the telecom sector.

A strong public sector telecom company will not only prevent the private players from increasing tariffs as an easy means to wriggle out of the ongoing financial stress but also ensure that even rural consumers access digital services.

BSNL is also strategic for providing secure communications services to highly sensitive segments like the defence establishment and along the international border.

Our Mumbai Bureau

Published on

July 31, 2022



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