Financial Daily from THE HINDU group of publications
Thursday, Mar 07, 2002
Info-Tech - Telecommunications
Corporate - Restructuring
BSNL to be split into four business units
NEW DELHI, March 6
PUBLIC sector telecom behemoth Bharat Sanchar Nigam Ltd (BSNL) is being split into four separate business units as part of a massive restructuring exercise to cope with the impending competition in basic and national long-distance services.
According to official sources, the BSNL board at its recent meeting cleared the proposal with a view to bringing about more efficiency in its functioning, and also in the light of the fact that speedier decisions were required to face the competition from private companies.
The sources noted that each of the business units for basic, national long-distance, cellular and value-added services will be headed by a director who will report to the chairman and managing director.
The company had until recently a monopoly status in the basic services across the country (except Mumbai and Delhi) and the national long-distance services. The private operators led by the Tatas, Bharti and Reliance groups are gearing up to cover the entire country for both these services, which could see the company losing its market share gradually.
It operates telecom services in all the circles except Mumbai and Delhi and boasts of the largest telecom network in the country with an estimated 25.20 million direct exchange lines (DELs).The company has also announced plans to start cellular services with an investment of around Rs 2,000 crore. Besides, it is introducing mobile telephone in its network based on WLL technology.
The board, while clearing the proposal, has noted that internal audit functions should be placed directly under the CMD, and should be monitored. The micro-level details will be shown to the directors concerned of the special business units, while the macro-level position will be shown to the CMD and also presented to the board of directors at regular intervals.
The sources noted that the financial and other operational modalities are yet to be worked out. However, the board has directed the management to speed up the process of reorganisation.
This is also being seen as a move towards the impending disinvestment of the company, which is to be taken up after Mahanagar Telephone Nigam Ltd in the next fiscal.
BSNL, which was set up as a corporate entity in October last, has a capital base of Rs 5,000 crore.
The Union Government currently holds the entire equity in BSNL after the erstwhile Department of Telecom Services and the Department of Telecom Operations were converted into a corporate body on October 1, 2000. BSNL has an authorised capital of Rs 10,000 crore and a paid-up capital of Rs 5,000 crore.
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