The Hindu Business Line : DoT asks BSNL to pull up socks, take on rivals

EXPRESSING concern at the dwindling bottomline of Bharat Sanchar Nigam Ltd (BSNL), the Department of Telecommunications (DoT) has asked it to prepare a detailed strategy report that would enable it to shore up its profits, even while keeping expenditure on a tight leash.

According to official sources, with the company expected to end the current fiscal with a profit of close to Rs 3,000 crore, fifty per cent less than in the previous year, DoT has asked the management to chalk out a viable strategy that would help it face competition from the private operators, especially in the cellular services.

Although BSNL had set an internal target of end June this year to overtake Bharti as the largest GSM cellular operator, it continues to lag behind. The growth in its subscriber base has further declined with the success of Reliance Infocomm's schemes for its CDMA mobile services.

The sources noted that one of the main factors that had favoured BSNL when it launched its services in mid-October last year was its reach. Compared to the private operators like Bharti, which are yet to penetrate the rural corners of the country in a big way, BSNL did not hesitate to expand its reach to these untapped areas. Hence it faced absolutely no competition and could pick up customers in droves.

However, with the launch of CDMA services by Reliance, customers in these areas started having a choice, and that is where BSNL seems to have lost its competitive edge.

Another factor, which appears to have worked against BSNL was the free incoming regime enforced by the Telecom Regulatory Authority of India from May this year. Until then, the CellOne tariffs had the lowest charge for both outgoing and incoming calls. However, once all incoming calls were made free, the price difference in comparison to the private operators was not large enough to attract customers.

The DoT has taken note of this slowdown and asked BSNL to prepare an effective strategy to overtake the private operators. The company has also been asked to explore the possibility of leveraging the receipts from the universal service obligation fund to raise finances from financial institutions to achieve higher level of physical performance.

In a recent review of its quarterly performance, the Department has also expressed concern over the delay in tender finalisation and procurement of equipments for various services.

It has observed that the village public telephony programme had also slowed down considerably due to delay in procurement of equipment for wireless in local loop. The company was asked to take steps to accelerate decision making in procurement related matters so that the targets for 2002-03 were fully achieved.

A report on collection efficiency and collection figures for cellular services has also been sought, the sources said.

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