BCG scripts BSNL revival

Written by Anandita Singh Mankotia | New Delhi | Updated: Aug 9 2009, 03:17am hrs
The country's second largest telecom operator by overall subscriber base, state-owned BSNL, which has seen massive erosion in net profits and is surviving only on interests from its cash reserves, is putting up a four-pronged revival plan based on the recommendations of Boston Consulting Group (BCG).

As per the strategy, the company will focus on four key operations--consumer mobility, broadband, enterprise business and new business which includes infrastructure sharing.

BSNL declared a net profit of Rs 574.85 crore for the financial year 2008-2009, down 81% compared to the previous year. The total revenue was at Rs 35,811.92 crore for the same period, marginally up from Rs 32,360 crore in the previous fiscal. While the profit from the company's operations already became negative, the net profit remained positive on account of the profit from other operations.

According to sources, the telecom major is going to strengthen its consumer interface and distribution network. "BSNL's products are available in only 40% of the outlets as compared to the market leader. The company is aiming to increase its product availability to 90% of 8 lakh plus outlets. Secondly, time for activating connections, roaming services and customer care will be shortened significantly and marketing of the existing services as well as the new 3G ones will become very aggressive from now onwards", sources explained.

"As far as broadband is concerned, BSNL is the market leader with more than 50% market share, which is increasing 5% annually. We have set ambitious targets of doubling our connections from the current 3.5 million to 7.5 million. The biggest impetus would come from the WiMAX-based broadband services," officials told FE.

According to BCG, BSNL's enterprise business is a weak link in its entire operational chain. For instance, the BCG report has said, "There are significant gaps in the company's 'go to market' approach. There is almost no customer segmentation and special service level agreement over large enterprises." A company executive said that in order to revive its enterprise business, the company would now address the issue at three levels--product sales, service delivery and service assurance. Customers would be divided into platinum, gold and silver accounts with special service-level agreements within each segment.

In the new business, the company is banking on its tower asset base to generate a new income stream. As part of this strategy, the company recently announced that it was eyeing revenue of over Rs 1,000 crore from leasing out its towers to private operators. BSNL has an asset base of over 40,000 towers across the country and 37,000 BTS on existing towers. The company is currently negotiating various

tower sharing agreements with telecom operators.