Recently, BSNL, the state-owned telecom PSU, was in the news for failing to pay salaries to its 1.7 lakh employees for February. The Centre’s action to ensure that employees are not affected, at least for the immediate future, must assuage the employees.
BSNL, which was a Navaratna company just 10-12 years ago now has over Rs 90,000 crores of accumulated losses. The new government should take some significant steps to get BSNL back on track.
The wage bill for BSNL and MTNL (the state-owned telco providing services in Delhi and Mumbai) is about 60 per cent of the revenue. This was about 20-22 per cent 12 years ago. Over the past several years the wage bill increased while the revenue has been stagnant or reducing. Meanwhile, private telcos operate at 9-14 per cent wage bill as a percentage of their revenue.
While the hyper competitive environment can be blamed for the woes of this sick PSU, the situation also shows that poor management and lack of agility can pull down any profitable organisation rapidly. A recent report shows how the paltry productivity of BSNL/ MTNL compares with their private peers. On an average, each employee of the PSU manages about 500 subscribers, while the private telcos manage 20,000 to 28,000 subscribers per employee. Interestingly, even China’s state-run mobile operator, China Mobile is better than BSNL in this parameter. China Mobile has a base of a whopping 90 crore subscribers and its employees handle over four times the subscribers compared to the BSNL staff.
The merger of BSNL and MTNL has been on the cards for some time, but successive governments have failed in taking action.
Way back in 2009, the government tried to encourage BSNL by providing 3G spectrum before the auction was held for private players. But BSNL could not make any impact with the head start. There was no such luck for BSNL when it came to the 4G spectrum. The lack of 4G offering has put BSNL on the backfoot. After Reliance Jio’s entry, private players are competing to provide better rates for the subscribers. And all this while, BSNL’s services have been limited to just 2G and 3G. This has been a huge disadvantage for the PSU. BSNL and MTNL account for less than 10 per cent of the wireless subscriber base. And BSNL has not been able to match the private players when it comes to marketing their services.
Bureaucracy and slow decision making during equipment purchase and managing contracts, and inadequate management flexibility in pricing plans and challenges around vendor management contribute to BSNL’s woes. Added to all this, BSNL staff are indifferent when it comes to customer retention.
In fact BSNL has tried to implement the FTTH (Fiber to the Home) connectivity through vendors, but it has not been a smooth ride. The back-and-forth between BSNL and the vendors puts the subscribers in a spot. Perhaps, BSNL needs to learn from the private telcos on how to handle managed services from vendors.
Notwithstanding the shortcomings, BSNL still commands the highest market share in wireline broadband with lakhs of kilometers of optical fiber cable across the country. It has infrastructure/towers and a talented workforce. This means the PSU can rise again. The government’s actions must go beyond the tactical bailout package which is being worked out.
Perhaps the government should learn from Telstra of Australia and British Telecom of the UK. They are great examples where the government control was drastically reduced. The companies are listed in the stock exchange and now have improved and agile management structure. They are now accountable to shareholders. Despite stiff competition, both the companies have performed exceedingly well. The Centre should consider a stake sale and bring in management talent and create a professional board. Accountability must be enforced.
It is estimated that the land assets owned by BSNL is worth over Rs 70,000 crore. The government must create the right checks and balances to monetise the amount either by selling the assets or leasing them out. It must conduct an audit of the active infrastructure being used by BSNL and suggest means of improving the unutilised/under utilised assets. The company must soon find ways of offering next gen technologies. News reports suggest that BSNL could take a lead on 5G. That is heartening. However, keeping in mind the company’s track record, implementation could be a cause for worry.
The government must set a 18-24 month goal of right sizing the workforce and bringing in efficiencies using industry benchmark on productivity. The government should look beyond voluntary retirement schemes. It should actively encourage entrepreneurship amongst employees and create a platform for employees to come up with ideas. It can enable a support system for localised content and solutions for the Indian market and also utilise the start-up ecosystem for upskilling.
The new government must play a pivotal role in creating and implementing a strategy to breathe life into the PSU. Genuine efforts are needed to get BSNL off life support.
G Krishna Kumar
ICT professional and columnist based in Bengaluru
Email: Krishnak1@outlook.com