Lease of life

Updated on: Jul 29, 2022
BSNL revival: The Centre with its package has given the PSU telecom major a chance to turnaround

BSNL revival: The Centre with its package has given the PSU telecom major a chance to turnaround | Photo Credit: Kesavan A N 1612@Chennai

A ₹1.64 lakh crore package for BSNL holds promise, but deliverables must be clear

The Centre has once again come to the rescue of loss-making Bharat Sanchar Nigam Ltd by announcing a ₹1.64 lakh crore package. This is meant to give the public sector telecom company a sliver of opportunity to become a viable competitor to private operators such as Reliance Jio and Bharti Airtel. While Communications and IT Minister Ashwini Vaishnaw informed Parliament in March that BSNL had run up losses of ₹50,000 crore over the last five years, it has managed to turn EBIDTA positive, in large measure due to the October 2019 package of ₹74,000 crore, dominated by a VRS component of about ₹30,000 crore. Over 78,000 employees opted for the package, leading to a huge reduction in the wage bill. The ₹1.64 lakh crore package can now help BSNL bolster its technological competence to improve long-term revenues. Under the package BSNL will be given spectrum worth ₹44,993 crore which should help it to launch its much delayed 4G services this year. The Centre will also provide sovereign guarantee to BSNL and MTNL for raising long-term loans of ₹40,399 crore in addition to paying AGR dues of BSNL amounting to ₹33,404 crore. These measures will clean up BSNL’s balance sheet, enabling it to make large investments for rolling out a pan -India mobile broadband network. But BSNL needs to put in place a turnaround strategy. It has received large bailout packages in the past, in the form of refunds on spectrum payments, soft loans, and grants. The deliverables should be clear.

This move underscores the strategic importance of BSNL at a time when the Centre has been exiting public sector companies. India’s telecom consumers need BSNL as an effective counter to a fast emerging duopoly in the sector. A strong public sector telecom company will prevent private players from increasing tariffs to wriggle out of financial stress, and ensure that even rural consumers access digital services. BSNL’s biggest challenge is to shake off a bureaucratic decision-making apparatus and a culture that does not put customers at the centre. The new paradigm in telecom is data; and here, whoever gives the best experience will emerge a winner. This experience is driven by device, content, access, application, storage, and security. Operators who are quick to understand consumer demands, and nimbly cater to them, will win.

BSNL may do well to learn from past errors of omission and commission. In December 2012, a panel headed by Sam Pitroda offered a 15-point turnaround plan, which included changing procurement procedures (using tools such as e-procurement and vendor rating), adopting a managed services model for its various operations, and inducting a chief executive from the private sector. The PSU still buys equipment through tenders where the lowest bidder wins. The best vendors in technology are not the cheapest. BSNL needs to be given autonomy, with leaders of integrity who can establish transparent and effective governance policies. Marketing executives who cannot adopt 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 proposed package is perhaps the last parachute that BSNL should get.

Published on July 29, 2022
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