While coming out with the third revival package of Rs 89,000 crore for BSNL last week, the government said the state-owned firm will emerge as a stable telecom service provider with this, focused on providing connectivity to the remotest parts of India. Implicit in this statement was that the company’s services are critical in far-flung rural areas which are not served by private players as they are guided by profit motive.
However, data shows that private operators like Reliance Jio, Bharti Airtel and Vodafone Idea, are not only providing services in all rural corners of the country, but their rural market share is also much higher than BSNL’s.
Currently, out of the total 1.143 billion mobile subscribers in the country, 45% or over 516 million are rural subscribers. In the rural areas, BSNL has a market share of 6.3% with a rural subscriber base of 32.52 million as of March-end, according to data by the Telecom Regulatory Authority of India (Trai).
In comparison, Jio has a market share of 36.5% with a subscriber base of 188.7 million, followed by Bharti Airtel at 34.8% and nearly 180 million subscribers, and Vodafone Idea at 22.3% with a subscriber base of 115 million.
BSNL lagging behind peers in rural areas is because of increased focus of private companies in such areas, lack of capex by BSNL to strengthen services both in rural as well as urban markets, stagnant subscriber base, as well as absence of 4G and 5G services by BSNL, among other factors.
“Now the time has come when BSNL should be in the league of the major players and is able to bring connectivity to the places where normal commercial consideration companies will not be able to go,” communications minister Ashwini Vaishnaw had said last week.
If one looks at the last one year, BSNL had a rural market share of over 7% in March 2022 with a subscriber base of about 37 million. Comparatively, both Jio and Airtel had a roughly similar rural market share of nearly 34% each in March 2022 with a subscriber base of 176 million and 174 million, respectively.
Despite the government’s previous two support packages worth over Rs 2.3 trillion, BSNL has not been able to capture rural subscribers lost by Vodafone Idea, which had 131 million subscribers in March 2022 with a market share of 25%.
“With support from the government, BSNL has a strong focus on rural areas to provide services at competitive rates. The focus of the company currently is to grow its FTTH (fibre-to-the-home) and enterprise business. In about six months, there will be a greater focus on the mobile services segment once we start deploying the 4G networks,” BSNL chairman and managing director PK Purwar had told FE last month.
Currently, about 38,000-40,000 villages in India do not have 4G connectivity. The government is targeting to complete 4G saturation by 2024, minister of state for communications Devusinh Chauhan said in Parliament in April.
Interestingly, the government in July last year approved Rs 26,316 crore for BSNL to provide 4G mobile services using indigenous stack in 24,680 uncovered villages across the country.
The project has a provision to include 20% additional villages on account of rehabilitation, new-settlements, withdrawal of services by existing operators etc, and the funding will be done through the Universal Services Obligations Fund (USOF).
“The rural 4G saturation project is expected to be operational once the company commercially launches 4G. Even if BSNL connects most of the villages, it will be difficult for it to get closer to players like Airtel and Jio as both of them have a strong focus in the rural market,” a Mumbai-based analyst said, adding that along with connectivity, profitability is also being considered by private telcos to provide services in the remotest parts.
While Jio has continuously captured a strong share in rural areas with its free internet offers when it launched its services in 2016, Airtel is eyeing 60,000 high potential villages Airtel where it is not present.
“We could have gone there earlier, but today I think the time is right for us to expand into these areas. This expansion will provide a fair market share and provide tailwind to the business. We are doing a lot of sophisticated data science to decide which are the places that we really need to rollout,” Airtel CEO Gopal Vittal had said in February.
According to Vittal, out of the 60,000 villages, the company has identified roughly 40,000 high potential villages to focus on profitability.
Further, with 5G rollout, both Airtel and Jio are looking to take a strong hold over the rural areas as well, focusing on quality customers.