From bureaucratic whim to business sense

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New Delhi, Oct 1: years ago when it was at its peak, its valuation would have been around $60 billion. Since then, BSNL’s marketshare in the fixed-line segment has fallen from a high 88% to 76%. In the mobile segment, its marketshare has dwindled from 20% to 14%. With competition in the sector growing more intense, the churn rate is expected to increase in the days to come, which could see BSNL losing further marketshare and, thereby, valuation if the government does not act quickly.

Communications & IT minister A Raja shares the concern, albeit from a somewhat different perspective. Raja on Tuesday asked BSNL to pay urgent attention to improving service, customer care and responsiveness to customer needs to beat the fresh challenges arising from the impending launch of mobile number portability. He also wanted the customer grievances redress system to be strengthened and the skills of the technical and managerial staff upgraded through training.

Of course, listing isn’t the only thing BSNL needs to get right. One area that needs immediate revamp is its procurement policy. In a technology-driven industry, investments in new technology have to be made quickly. Even with an IPO, 90% control over the company would still rest with the government, implying a continuation of the tendering system.

This archaic system causes delays—in both procurement and implementation—thereby directly affecting profitability. The government must realise the special needs of BSNL and exempt it from such tedious and lengthy procedures if its is to play on a level playing field with its private sector peers.

Some within the company feel that BSNL must also seek overseas acquisitions, which other Indian telecom companies like Bharti Airtel and Reliance Communications are already doing to spread their risks. In the case of BSNL, overseas acquisition would not only help it tap global opportunities, but also enable it to utilise its huge manpower—it has 20 times more staff than any other telco--more efficiently. BSNL has a staggering employee cost Rs 7,800 crore, the highest wage bill of any telecom company in India.