BSNL's Downward Spiral From Maximum Profit-Minting PSU To Loss-Making, Liability Ridden Entity

The crisis that has befallen state-owned Bharat Sanchar Nigam Limited seems to be getting graver by the day. Reportedly, the company has about Rs 13,000 crore worth outstanding liabilities, which is proving to be a great hurdle in its day-to-day operation.

The company had recently written to the government asking for immediate funding, in absence of which it would be difficult to continue operations. Puran Chandra, senior general manager at BSNL’s corporate budget and banking division, in his letter to the joint secretary of telecom ministry said, “The gap between monthly revenues and bare expenses … has reached a level where continuing with operations would be nearly impossible without an immediate infusion of adequate equity.”

For the first time in 20 years, the payment of 1.76 lakh employees was also withheld owing to the alleged losses in February this year. However, a slight relief came as the employees’ dues for the month of June were cleared by the PSU using internal accruals worth Rs 2,000 crore.

BSNL Staring At Uncertain Future?

BSNL was one of the maximum profit minting PSUs between 2000 and 2009. It was, in fact, earning profits in excess, reportedly to the tune of Rs 10,000 crores in 2004-05 when the workforce was over one lakh strong.

However, 7 years later, NITI Aayog, the think tank of Centre placed BSNL in the list of loss-making PSUs. The onset of the major problem can be traced back to 2008-09 during the 3G spectrum allocation to BSNL. The UPA government at that time allotted the spectrum to the PSU before it began the auctions. However, the necessary equipment was not procured until 2013.

In 2016-17, the annual loss was pegged at Rs 4,793 and it rose to Rs 7992 crore in 2017-18. By the end of December 2018, the accumulated losses were over Rs 90,000 crore.

There are a plethora of reasons which is touted to be the reason behind the downfall. Poor management, a large number of employees and related costs and delayed modernisation, are some of them. It is also being alleged that while private players were looking at 5G auctions, BSNL is falling short of the spectrum to even offer 4G services.

In February, more than a lakh BSNL employees and officers held a three-day strike. The strike was held to highlight a number of issues including allocation of 4G spectrum to the telecom entity and non-implementation of long-pending wage revision. The All Unions and Association of BSNL (AUAB) alleged that “corporates like Reliance Jio” were eating-up their market.

The crisis is so bad that many BSNL offices at various locations have been unable to pay the electricity bills, leading to power cuts. The DoT had to issue a letter in March asking state governments to not disconnect electricity connections of BSNL and MTNL on the account of impending dues, given that these companies were providers of strategic services for the elections.

Kneejerk Reactions

As per media reports, as a part of the revival plan, the Centre is mulling over the decision to merge BSNL and MTNL into a single entity.

Reports also suggest that sale of the vast amount of land owned by the PSU is also on the revival agenda. BSNL reportedly owns about 11,000 acres across the country. The total worth of this land is estimated to be about Rs 65,000 crore.

It may be noted that while private players have around 30,000-40,000 employees, BSNL is overstaffed at about 1.76 employees. The Department of Telecom was also considering the option of lowering the retirement age. As per the Business Standard report, if the DoT finalizes the option of lower retirement age, the Centre will not have to release funds immediately, thereby deferring the financial liability.

The revival plan may also include measures like salary cuts and laying off of staff.

Additionally, reports suggest that the telecom department has asked BSNL to put all tenders and purchase order on hold, in lieu of the financial crisis.

“Not Only BSNL, Entire Telecom Sector In ICU”

In a press statement, the BSNL Employees Union (BSNLEU) said that the not only BSNL ‘but the entire telecom sector is in the ICU’. BSNLEU while agreeing to the present financial difficulties, said that BSNL was continuously expanding its mobile customer base.

“For example, in 2017–18, BSNL’s mobile customers grew by 11.5%, whereas Airtel’s mobile customers grew by only 9.5%, Vodafone’s grew by 3.8% and Idea’s grew by only 3.2%. Even in April 2019, BSNL has added 2,32,487 new mobile customers, whereas, Airtel has lost 29,52,209 mobile customers and Vodafone Idea has lost 15,82,142 mobile customers,” the statement said.

Reacting to the on-going BSNL crisis, Union Telecom Minister Ravi Shankar, in a written reply in Parliament said, “For BSNL and MTNL, stiff competition in mobile segment, high employee cost and absence of 4G services (except in few places for BSNL) in the data-centric telecom market is eroding their competitive strength.”

Addressing the concerns raised by various MPs in Parliament, Ravi Shankar said that the government is looking into the matter. “We want BSNL to survive and work effectively.”

Also Read: Payment, Pension Woes & Govt’s Alleged Favoritism Towards Reliance Jio Force BSNL Employees To Go On Strike