1. Editorial: Re-building BSNL

Editorial: Re-building BSNL

Leveraging its huge infrastructure is the key to this

By: | Published: November 19, 2015 12:21 AM

That Bharat Sanchar Nigam Ltd (BSNL) posted an operating profit of Rs 672 crore in FY15 as compared to an operating loss of Rs 691 crore in FY14 is encouraging and raises hope of its eventual revival, which is what telecom minister Ravi Shankar Prasad has often said is one of his main priorities. Getting from operational profitability to full-fledged profitability is not going to be easy since, while making operating profits in FY15, BSNL’s net loss widened to Rs 8,234 crore as compared to R7,020 crore in FY14—it is, though, true that had the new Companies Act not been in place, depreciation costs would have been lower by around Rs 2,000 crore. More worrying is the mere 2.3% growth in revenues—adjusted for inflation, that’s a negative growth. One of the factors behind FY15’s operating profit is the reduction in wages to Rs 14,963 crore from Rs 15,436 crore a year earlier, thanks to around 10,000 staffers retiring. Even so, a wage bill that is around half of annual revenues is way too high—as compared to BSNL’s 2.2 lakh employees, Bharti Airtel has just 25,000 personnel and its wage bill is 2.6% of its turnover.

Turning around BSNL will require both a dramatic cut in its work force as well as a sharp rise in revenues. The company is talking to private sector players for intra-circle roaming pacts and spectrum sharing. While roaming pacts will lower realisations since BSNL will only get a share of revenues, it can dramatically improve network utilisation and revenues. Spectrum trading can boost revenues—which can also be used to fund voluntary separation schemes—so it is important the government give the PSU a free hand, apart from re-looking the caps that make this difficult. BSNL must also expedite the creation of its independent tower company, for which Cabinet approval has been received. With about 60,000 towers, the valuation of it would be around Rs 24,000 crore—an independent tower company would enable it to transfer surplus staff or sell a stake to fund voluntary retirement for staffers. Creating a separate land company where its land bank and real estate rentals can be parked is another way of creating a new revenue stream. More important, especially given the focus has to be on improving topline, the PSU has to leverage its 7 lakh km of optic fibre networks as well as the copper fibre going into 16 million homes—partnership with private firms could quickly ensure the landlines are converted into broadband internet ones and the optic fibre can be profitably shared with private telcos that are capacity-constrained. Since selling BSNL is going to be near impossible with its huge work force, the government has few options other than making this plan work.

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Tags: BSNL

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