Relevance: GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Key Phrases : Bharat Sanchar Nigam Limited, Government-owned, Telecommunications, Tele-density, Reliance Jio, and Bharti Airtel, Competition, Government interference, Decision making, Revival package 2019, Revival package 2022, BBNL, Duopoly, Domestic Market, Rural broadband, Strategic areas.

Context

• The government has cleared a Rs 1.64 lakh crore package to revive telecom company Bharat Sanchar Nigam Ltd (BSNL).
• India’s telecom consumers need BSNL as an effective counter to the fast-emerging duopoly in the telecom sector.

About BSNL

• Bharat Sanchar Nigam Limited (BSNL) is a government-owned telecommunications service provider headquartered in New Delhi, incorporated on 1 October 2000.
• It is under the ownership of Department of Telecommunications, Ministry of Communications, Government of India.
• It provides mobile voice and internet services through its nationwide telecommunications network across India and is the largest government-owned-wireless telecommunications service provider.

Reasons for losses of BSNL

• Competition
  • BSNL was the most reliable fixed-line service provider but could not compete with its agile private competitors in mobile networks.
• High maintenance cost
  • The biggest challenge with BSNL is its workforce. It has 1.76 lac employees.
  • If it earns 100 Rupees then more than 75 Rupees have to be paid on salary and expenditure of its employees.
• Government interference
  • Repeated and unchecked government interference and stiff opposition from unions to sell a stake in the PSUs are the causes of the sorry state of affairs for BSNL.
• Slow pace of decision making
  • BSNL’s biggest problem is that it has many layers of decision-making.
  • This makes it a slow-mover in a market unlike Reliance Jio and Airtel.
  • For example, the PSU still buys equipment through tenders where the lowest bidder wins. The best vendors in technology may not always be the cheapest.

Revival package for BSNL

• Revival package 2019:
  • For helping spur operations, the Government had announced a capital infusion of ₹20,140 crores for acquiring spectrum.
  • The overall package, paved the way for the MTNL and BSNL to raise long term bonds for which the Centre provided a sovereign guarantee.
• Revival package 2022:
  • Recently on 27 July, Union Cabinet approved another revival package worth ₹1.64 lakh crore for BSNL.
  • It is the second reform package after 2019 and is to be utilised over the next four years.
  • The revival package initiates measures on three fronts, namely,
    • Infusing fresh capital for upgrading the state-owned operator’s services,
    • Strengthening its stressed balance sheet,
    • Augmenting its fibre network by merging Bharat Broadband Nigam Limited (BBNL) and BSNL.
  • It is expected that the package could help with a turnaround in such a manner that BSNL starts earning profits in FY2026-27.
  • BSNL would be allocated spectrum in 900/1800 MHz band administratively at the cost of ₹44,993 crores via equity infusion.
  • Government would also be increasing the authorised capital to Rs.1.50 lakh crore in lieu of its adjusted gross revenue (AGR) dues, provision of capital expenditure and allotment of spectrum.

Why BSNL’s revival is important?

• Counter duopoly:
  • India’s telecom consumers need BSNL as an effective counter to the fast-emerging duopoly in the telecom sector.
  • A strong public sector telecom company will not only prevent the private players from increasing tariffs as an easy means to wriggle out of the ongoing financial stress but also ensure that even rural consumers access digital services.
• Boost domestic market:
  • Unlike private telecom operators, BSNL has had a heavy dependence on domestic component manufacturers — something that also helps foster a vendor base in the country.
  • With BSNL launching 4G services and subsequently 5G, this will also take the domestic component industry along with it.
• Rural broadband:
  • With BSNL, the government is able to push forward with its rural broadband agenda.
  • Nearly 36 per cent of BSNL’s optical fibre customers are in rural areas, and the operator assists the government in expanding to far-flung areas with low-income consumers for operations that are typically non-viable commercially.
• Communications services in strategic areas:
  • BSNL is also strategic for providing secure communications services to highly sensitive segments like the defence establishment and along the international border.

Way Forward

• With these measures, the Centre expects that BSNL will be able to improve the quality of existing services, roll out 4G services, and become financially viable. It also expects that with the implementation of this revival plan, BSNL will turn around and earn profit in 2026-27 (April-March).
• However, If BSNL wants to succeed, then it needs leaders with integrity who can establish transparent and effective governance policies.
• The Centre should also allow such leaders to be independent and take strategic decisions to transform the company. Employees who cannot align with the new realities of the telecom world need to exit.
• Marketing executives who cannot think of a customer-centric approach, technicians and engineers who cannot innovate for the future, staff who are occupying redundant positions, and top executives who cannot steer the company’s turnaround plan should have no place.
• All employees should be evaluated in well-established performance criteria. A merit-based culture should be created in the organization. All appointments (recruitments and promotions) should be based strictly on merit. This will increase the morale of hard-working employees

Sources: The Hindu BL

Mains Question:

Q. Discuss the reasons behind the losses of the BSNL and why has the government decided to infuse money into a loss-making company like BSNL? [250 Words].