The
Centre needs to act urgently to revive this strategically important PSU
The Centre must take immediate steps to revive Bharat Sanchar
Nigam Ltd if it wants to achieve the objective of reaching 100 per cent
tele-density in rural areas and keep telecom services affordable for the common
man. While private operators have taken over the market with billions of
dollars in investments and cost-efficient operations, India’s telecom consumers
need a public sector entity like BSNL as an effective counter to any
monopolistic venture that may arise due to the ongoing financial stress in the
sector. From as many as nine operators, intense competition and below-cost
pricing have reduced the number to just three players. The larger surviving
operators, who have so far managed to sustain their operations, are under
pressure to increase tariffs. The highly leveraged balance sheets of these
operators could also force them to slow down the rollout of next-generation
data networks to rural and economically unviable areas. In this context, it is
important to have a strong PSU telecom company which will not only prevent
private players from increasing tariffs as an easy means to escape financial
stress but also ensure that rural consumers are catered to.
Reviving BSNL is tough, but not impossible. The once dominant
public sector company has been reduced to a mere footnote, thanks to years of
political interference and bureaucratic functioning. There have been many
attempts earlier to improve the company’s operations, but most of them remain
on paper. For example, a committee headed by Sam Pitroda, then advisor to the
Prime Minister, offered a 15-point plan to turnaround the PSU, including
trimming staff, divesting 30 per cent equity, adopting a managed services model
for its various operations and inducting a chief executive from the private
sector. This plan has not been acted upon.
Time is running out, though. BSNL has, in 14 years, moved from
Navratna status to being declared as a sick PSU, with cumulative FY2009-18 EBIT
losses of Rs.82,000 crore. To prevent any further erosion of value, the
Centre must do three things. First, divest all the real estate land parcels
owned by the company and invest the proceeds into buying all the technology
BSNL needs to be at par with private players. Second, implement the proposals
of the Pitroda panel, especially those related to cutting down staff costs and
hiving off various businesses into different verticals. Here, the Centre can
study how British Telecom, once a struggling PSU in the UK, was turned around.
Finally, remove all political interference and appoint a strong, independent
management to run the company. This will not only secure the future of BSNL,
but also ensure that affordable digital services reach every nook and corner of
the country.
Published on May 03, 2019
