Tuesday, January 25, 2022

Was BSNL intentionally killed or did it fall behind Jio?

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Bharat Sanchar Nigam Limited (BSNL), India’s largest public-sector telecom operator, appears to be in trouble. The public sector telecom behemoth that made telecom services accessible to rural areas by providing low-cost mobile connections in commercially unviable remote places has been losing money for several years, forcing the government to explore selling it or shutting it down entirely.

Between 2015-16 and 2017-18, BSNL lost a total of Rs 17,645 crore, with a loss of over Rs 14,000 crore expected in FY 2018-19. BSNL has lost about Rs 32,000 crore in the last four years. As a result, allegations have surfaced that the Union government is considering shutting down the two strained telecom PSUs — BSNL and MTNL.

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Via images.hindustantimes.com

Former BSNL finance director SD Saxena remarked, “It was extremely easy for the government to say it will liquidate the firm.” The enterprise had provided the government with substantial profits. The type of investments made in the company had already paid off several times over.

“The company was founded in 2000, and by 2008, it had paid the government many times more than it had invested in the company,” he told to a reporter, adding that it was the only company in the telecom sector that provided pan-India telecom services, and that shutting down such a company was unwise.

Another telecom specialist, Ravi Visvesvaraya Sharada Prasad, who has been following the market for decades, agrees with him.

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The country, in his opinion, should have a national public-sector telecom operator. It was necessary for strategic reasons, as well as the fact that private players would not cover some locations owing to business considerations, he told the reporter.

BSNL Crisis A learning for PSUs
Via 1.bp.blogspot.com

After its transformation from a government agency to a corporate company in October 2000, the BSNL, formerly the crown jewel of the central PSUs, has faced both extremes in its almost two-decade-long journey.

Due to intense competition from competitive commercial competitors like as Airtel, Vodafone, and Idea, BSNL announced its first loss in FY 2009-10 after making a profit for the first eight years of its operations.

The sorry state of affairs of BSNL, which was once spearheading the Union government’s off-budget capital expenditure programme and earning more profit than India’s largest oil marketing company Indian Oil, is blamed on red tape and slow decision-making, according to telecom experts and former BSNL officials.

SD Saxena told the reporter that, Once upon a time, BSNL’s capital investment was higher than Indian Railways and their profit was higher than Indian Oil’s. This is a PSU that did effectively during the first 8-9 years of its operations.”

Via upload.wikimedia.org

Saxena attributed the loss of BSNL’s market share to private telecom providers like Reliance Jio and Airtel and the government’s strict tendering requirements. BSNL was extremely strong in fixed-line services and had the greatest market share in the landline telephone business, but it was unable to meet the challenge given by more innovative private operators in the mobile sector.

The company was performing extremely well in the mobile sector as well, SD Saxena explained, but it was unable to grow up swiftly in the mobile sector due to unique tendering rules.

At the time, the mobile sector’s demand was such that it was gaining over one crore consumers each month, and they wanted to get into it rapidly. But every time they were required to go through the standard tendering method, which was not applicable in the market because the technology was changing so quickly, stated Sinha citing the reasons for BSNL’s cellular business, which was launched under the brand name CellOne, growing slower than projected.

Via tezzbuzz.com

According to SD Saxena, the government rejects every tender that is floated. If this was the case, they wouldn’t let the company play, and if it failed, they wouldn’t support it, and the simplest solution would be to simply kill it.

As the Union government considered many possibilities for the future of BSNL and MTNL, including a complete shutdown, the destiny of more than 1.65 lakh employees hung in the balance. According to sources, the finance ministry has rejected the department of telecom’s plan for a Rs 70,000 crore revival, instead suggesting that both BSNL and MTNL be closed.

Central trade unions and employee unions have aggressively opposed the proposal, claiming that the government has failed to support the enterprise in times of difficulty.

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