When the government provided a Rs 74,000-crore bailout package to BSNL in October 2019, the company had posted a net loss of Rs 13,804 crore (FY19). The Centre had then provided a blueprint for the ailing PSU’s revival with the package provided by it. The projection was that the company’s losses would widen in FY20 — it posted a massive loss of Rs 15,499 crore during the fiscal — but thereon start narrowing and come down to around Rs 5,432 crore in FY21. It would then post a net loss of Rs 396 crore in FY23 and break into a profit of Rs 2,235 crore in FY24.
On Wednesday, announcing a second and bigger revival package of Rs 1.64 trillion for the state-owned telco, telecom minister Ashwani Vaishnaw said it is expected that with the implementation of this revival plan, BSNL will turn around and earn profit in FY26-27.
Back then, the diagnosis of BSNL’s sickness was mainly attributed to its huge workforce of 165,000 employees, whose wage bill comprised 77% of the company’s revenues. The wage bill of private telecom operators is around 5% of their total revenues. Based on this diagnosis, it was felt that once an attractive voluntary retirement scheme is offered to employees to bring down the staff strength, BSNL will march into profit. To achieve this objective, the biggest chunk of the 2019 revival package — Rs 29,937 crore — was for a VRS package for employees above 50 years of age. Of the 100,000 eligible staff, 78,560 opted for the scheme.
The company’s FY21 numbers (the FY22 numbers are yet to come) show that it managed to reduce losses by more than 50% at Rs 7,441 crore during the fiscal as its wage bill came down by around 51% to Rs 6,679 crore as a result of the VRS package. The decline in wage bill brought down the company’s total expenditure during the year by 24% to Rs 26,036 crore. The wage bill did come about, but the company’s total revenues declined by 2% to Rs 18,595 crore.
BSNL became Ebitda-positive after more than three years — a fact pointed out by Vaishnaw on Wednesday. The company reported a positive Ebitda of Rs 1,177 crore in FY21 against a negative Ebitda or loss of Rs 6,879 crore a year ago.
However, revenues from wireline telephony continued to remain under stress and those from mobile services declined marginally due to the absence of 4G services and stiff competition from private players. Herein lies the problem. The company’s revenues continue to fall and unless there’s a plan which leads to a massive surge in revenues, the government will need to come out with more revival packages in the years to come – unless it decides to close down the company.