Bharat Sanchar Nigam Limited (BSNL) has been in the news recently for reporting an operational profit of about ₹672 crore in 2014-15 after continuous losses for the previous years. But the company is still hugely loss-making, and the CMD expects it to turn profitable by 2018.

Sliding performance Recent announcements indicate that both BSNL and MTNL lag behind the private telcos in revenue growth. The market share of BSNL/MTNL in mobile is 8.5 per cent which declined from 14 per cent in 2008. Included in the list of Navratna public sector units in 1997, the sister firm MTNL (the operating company in Delhi and Mumbai) is on the verge of losing its coveted status, having accumulated losses at the rate of more than ₹1,000 crore per year.

The share price of MTNL has declined by 95 per cent since its heydays of ₹390 in March 2000. Though the issue of merging BSNL and MTNL to form a single company with pan-India assets and subscriber base has surfaced time and again, successive governments have put it on the backburner. While the divestment talks have not yet touched upon BSNL yet, it is time for the government to think along these lines. Here are the reasons why.

The average share of spectrum, the essential resource for providing mobile services, held by BSNL is about 20 per cent in a circle, which is significantly more than that held by most of the private telcos. The number of cell sites and associated Base Transceiver Stations (BTS) of the combine is more than 70,000, comparable to some of the leading telcos.

Unutilised infrastructure Commanding 75 per cent of the landline user market, BSNL is a near monopoly in wired direct exchange line, especially in rural areas.

However, with all these assets, why are government telcos floundering in recent years? The main reasons, as pointed out partially by the minister, include (i) inadequate marketing of their services (ii) slow decision making with respect to purchase of equipment and managing contracts with managed service providers and (iii) inadequate management flexibility in pricing plans, and sharing arrangements, to name a few.

These have also started affecting the quality of service as is evident in the recent Quality of Service report released by TRAI.

The government firms had their own share of sops such as (i) year-ahead early start in the assignment of both 3G and Broadband Wireless Access (BWA) spectrum in 2009 and (ii) reimbursement of about ₹10,000 crore of licence and spectrum charges during 2001-06, as part of commitment to BSNL corporatisation. However, the 6.2 MHz spectrum in the much valuable 900 MHz band held by BSNL/MTNL is coming to the end of its life in 2017 and it may have to be renewed pan India at the market value (if government does not provide sops once again!).

Despite the early release of spectrum, due to sloppy decisions in technology and service procurement, the BWA spectrum assigned to BSNL/MTNL in 2500 MHz band remains under and even unused in most of the circles, and has already been returned in about eight circles. The minister has also indicated that the spectrum in rest of the circles may also be surrendered soon.

Given the intensity of competition in the telecom sector, it is time that the government formulates a strategy for reviving the lagging telcos.

Globally, with the exception of China, most countries have reacted to the realities of the telecom market and acted accordingly — the notable examples being Telstra of Australia and British Telecom of the UK. In both these cases, government control was drastically reduced; they are listed in the stock exchange; with improved and agile management structure and accountability to shareholders, the companies have performed remarkably well, despite competition. The reasons for an overhaul are persuasive.

Revamp and divest First, is the effective use of infrastructure and spectrum that BSNL/MTNL have. Despite 18.26 million fixed line subscribers with BSNL/MTNL, the number of fixed line broadband subscribers is just about 60 per cent, indicating that rest of the infrastructure is grossly under-utilised. A possible way to monetise these wired local loop assets it to accelerate unbundling it to ISPs or other telcos which TRAI included in its recommendations on Broadband last year.

Now that both active and passive infrastructure sharing is allowed along with spectrum sharing the firms should consider improving utilisation of its assets and to monetise the same using appropriate business models.

BSNL has wealth of infrastructure and network especially in the semi-urban and rural areas. It is time that BSNL adopts ‘collaborate and compete’ philosophy by sharing the infrastructure with private players and monetising the same.

Second, thanks to its preferential status, it stands to gain in phase II implementation of BharatNet. Most of the States have started developing plans for this phase; it is only appropriate that BSNL takes a lead in being part of the project as (i) contractor for laying the optic fibre to selected Gram Panchayats or (ii) provider of broadband access services or both.

Third, the government’s Digital India agenda cannot be sustained unless there is a robust broadband infrastructure and associated content available across the length and breadth of the country. BSNL/MTNL combine has the requisite infrastructure to implement the same.

For example, Telstra achieved providing their 4G network coverage to over 94 per cent of the Australian population. Telstra launched MyCareManager in April 2015, an integrated eHealth product designed to help disability, community and residential aged care providers deliver innovative services and information from a distance.

Public projects in the areas of governance, health, and education require digital infrastructure and BSNL/MTNL should take active part in building infrastructure and content for the same.

Fourth, competitors of BSNL are way ahead in vendor management practices, incorporating fully outsourced models and technology de-risking. BSNL should implement best practices in the industry for vendor management to survive in the marketplace.

However, to achieve all the above, government should lend a free hand to flexible decision making, incorporate a professional management team, inculcate customer centricity in the organisation and make it super agile. All of these are possible, only if government steps aside by divesting and making over BSNL/MTNL to a professional, responsive, and responsible organisation. This will be a great relief for the tax paying public!

Kumar is an ICT professional; Sridhar is a Professor at IIIT-B. The views are personal

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