Will stimulus package breathe new life into ailing BSNL?, Telecom News, ET Telecom


Private telecom players will soon launch 5G while loss-making state-owned BSNL (Bharat Sanchar Nigam Ltd) moving at a snail’s pace is yet to launch its 4G mobile services.

From the second largest mobile player with a profit of Rs 10,000 crore circa 2005 to a struggling loss-making unit, BSNL has come a long way.

Due to the unavailability of 4G services, BSNL has already lost huge market share to private telecom operators over the past few years and holds a meager 10% market share in the market.

To help BSNL maintain and promote healthy competition in the industry, the government recently approved a Rs 1.64 lakh crore stimulus package and expects the ailing PSU to become profitable by FY2026. -2027. Stimulus measures include injecting new capital for upgrading BSNL services, allocating spectrum, relaxing its balance sheet and increasing its fiber network by merging Bharat Broadband Nigam Limited (BBNL) with BSNL.

However, this is not the first time the government has come to the rescue of BSNL. In 2019, the government had announced a lump sum fund of Rs 70,000 crore BSNL and MTNL Voluntary Pension Scheme as the cost of employees was the major reason dragging the company down.

It is essential that the government keep the BSNL operational, as telecommunications is a strategic sector. In border areas, areas of left extremism, etc., the presence of BSNL is essential. BSNL also acts as a market balancer. In addition, areas – rural and remote – where it is not commercially viable for private actors to venture, offer BSNL services.

But will the new stimulus package breathe life into BSNL?

The challenges will be many – competition in the telecommunications sector is intense. With the entry of Reliance Jio, the sector has consolidated into a private three-player market where one of the Vodafone Idea players is also struggling to hold on.

Currently, BSNL has revenues of around Rs 19,000 crore while expenses are around Rs 18,000 crore with an operating profit of Rs 1,000 crore. The company still has huge expenses despite offering VRS to its employees.

With the recent conclusion of India’s first 5G auction, private players are planning to launch the services sometime this year. On the other hand, the launch of 4G services by BSNL locally has been delayed for multiple reasons. BSNL is in the process of rolling out the Atmanirbhar 4G technology stack and a pan-India 4G rollout is still 18-24 months away. TCS has done a proof of concept for BSNL 4G and is preparing to deploy it commercially. BSNL could launch 4G and 5G in parallel. BSNL consumers are at a loss as its 4G launch could come when private players launch 5G.

Private telecom operators including Reliance Jio, Bharti Airtel and Vodafone Idea have already taken the lead in 4G and it would be difficult for BSNL to keep pace.

It will be a tightrope for BSNL which on the one hand promotes Indian technology in line with the governmental vision of Atmanirbhar Bharat but at the same time takes a commercial risk. Only time will tell.

Nevertheless, BSNL must present itself as an agile and responsive telecommunications service provider, offering efficient customer services. It must also look beyond its traditional market of rural and remote areas and enter lucrative markets that offer value and customer services similar to those offered by private players. Online presence – in social media and quick problem solving and offering other services to consumers through a mobile app could help BSNL learn new tactics for users in a digital environment.

Last but not least, there is employee mindset and development. As India enters a fully digital economy, company employees need to upskill with the changing times. As Telecommunications Minister Ashwini Vaishnaw said, “play or perish” will be the norm and a new norm for BSNL employees.

A difficult road to travel for BSNL before proving its courage. Hopefully this stimulus program, which is itself a four-year plan, will spur BSNL to recover.


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