That month, Bharat Sanchar Nigam Ltd (BSNL) was incorporated and it inherited the business from the government’s department of telecom services. With 2.4 crore telephone connections, Bsnl, overnight, became one of India’s largest companies—its annual turnover, back then, was assessed at ₹20,000 crore and it had a book value of assets worth ₹68,000 crore.

The new company faced a roadblock right away. About 400,000 employees from the department went on strike, resisting the change.

BSNL survived that strike and several others over the next two decades. But the road ahead still remains long and winding.

At a time when private telecom companies have already launched 5G services, BSNL is yet to roll out 4G commercially. It has been losing customers and its losses widened to ₹8,161 crore in 2022-23, from ₹6,981 crore the previous year. Its revenue, at ₹20,700 crore today, is roughly the same as 23 years ago, when it started.

On 7 June, the Cabinet Committee on Economic Affairs cleared a ₹89,047 crore revival package for BSNL, the third such package offered by the government. Overall, the government has pumped in ₹3.22 trillion, or $39 billion, into the company, now India’s fourth largest telecom and internet services provider.

The latest package funds the allotment of 4G and 5G airwaves through equity infusion by the government. And to put this in perspective, the package is worth almost the same amount that Mukesh Ambani-backed Reliance Jio spent during the last spectrum auctions, in September 2022 ( ₹88,078 crore). Jio, India’s biggest carrier, had picked up almost half of the spectrum that was sold.

The question is whether a revival is in sight. Or is it too late for BSNL to be revived? Can taxpayers’ money turn BSNL into a competitive telecom service provider? Let’s not forget that telecom is a hugely capital-intensive sector and India is arguably the toughest market in the world—an average user spends less than $2 a month for almost unlimited 4G data and free calls. Compare this to Brazil and China, where users spend more than double the amount, $4.6 and $5.2, respectively.

The answers, therefore, are nuanced. It depends on who you ask.

4G in times of 5G

Industry executives in the private sector, analysts and market watchers said that BSNL was always way behind. The catch-up game with the more agile private sector companies hasn’t been easy.

“BSNL has been relegated to being a laggard since the Indian telecom industry was infused with private sector competition,” Sanjay Kapoor, a telecom industry veteran, said. He was Airtel’s India and South Asia chief executive officer (CEO) between 2010 and 2013. “Devoid of technology (2G, 3G or 4G), they have not been able to match customer centricity, agility, build a brand/culture, or even attract talent to compete with the private service providers,” he added.

Kapoor mentioned that historically, inflexible policies added to BSNL’s woes—for instance, the government mandate to buy from the lowest bidders.

“Just getting additional fund infusion and spectrum for 5G appears insufficient to strike back and challenge the market leaders,” he concluded.

Like we mentioned earlier, BSNL is yet to launch 4G services commercially. India’s top two carriers–Reliance Jio and Bharti Airtel—have not only launched 5G services but between them, have set up 200,000 sites across the country in what is being viewed as one of the fastest 5G rollouts in the world.

BSNL aims to launch 4G services in a couple of months, followed by 5G in 2024. But this lag with the private sector won’t help in either customer retention or acquisition.

Arresting customer decline will be critical for BSNL—the company had 111 million customers in March 2018 and it has lost about eight million users since then, data from the Telecom Regulatory Authority of India (TRAI) showed. The competition, meanwhile, has gained. Bharti Airtel has increased its customer base from 304 million in 2018 to 371 million as of March 2023. Reliance Jio had 186 million customers in 2018 but scaled that up to 430 million as of March.

“One of the issues that BSNL, like most public sector units, faces is poor customer service. Today, users take to the social media to highlight problems and they expect resolution immediately. BSNL has been unable to offer that,” a senior industry executive said, asking not to be named.

In other words, BSNL will have to transform its entire customer service and spend more to match services offered by rivals. Private telcos contract armies of customer executives who are available 24X7; they reach out to existing customers proactively for upgrades or to new ones to port phone numbers.

BSNL does have social media presence—it runs multiple Twitter accounts, one for each circle or state. It launched a revamped BSNL Selfcare app in 2021, which now has over 5 million downloads. The question is if the company will allocate enough capital for superior services, going ahead.

A senior government official, who didn’t want to be identified, said that plans of monetizing its existing infrastructure—such as land, buildings and sharing of passive infrastructure like towers—did not take off. This further restrained the company financially.

Too strategic

Although BSNL has been making net losses, its financial position has improved over the past couple of years. It has been clocking operating profit since 2020-21. And in 2022-23, its revenue rose by 9% to ₹20,700 crore. The growth came on the back of higher number of fibre-to-the-home (FTTH) connections, in non-urban areas, smaller towns and villages. The company also earns from leasing its fixed lines and fibre infrastructure, which recorded a spike last year. BSNL has also reduced its debt, from ₹32,944 crore in 2021-22 to ₹22,289 crore in 2022-23. It plans to be debt-free in three years.

These are encouraging signs, but the minister for railways, communications and information technology, Ashwini Vaishnaw, knows it won’t be easy to bounce back. “With the package in place, BSNL has to emerge and revive, and will provide good quality service. That is the only way to win customers. I’m not saying this will happen overnight. It will take a lot of effort,” he told Mint.

The government won’t infuse any further equity or provide additional government-backed debt, Vaishnaw added, indicating that the telco will have to stand on its own, from here on. The government has increased its equity share in the carrier, by increasing its authorized share capital to ₹2.1 trillion from ₹1.5 trillion earlier .

Interestingly, the government believes that BSNL is not behind in the technology race. K Rajaraman, secretary, department of telecom, reasoned that 80-85% of the coverage, across the world, is still on 4G. So, there is life left in the technology—at least another 8-10 years. “Also, 2G services will continue. BSNL will surely be upgrading some of the 4G towers to 5G in the next one or one-and-a-half years, where they will get good revenue,” he said.

Besides the potential for revenue, the government is keen on BSNL because of its strategic nature. Telecommunications is a ‘strategic sector’ under the government’s public sector enterprise or PSE policy. The policy mandates one government-owned company to be operating in such sectors.

“We must be there in national interest, from a national security point of view. It is very important to back it (BSNL) up,” Rajaraman added.

Telecom services from a state-owned telco may be required in states and regions that share borders with hostile countries—like Jammu and Kashmir, Ladakh and some north eastern states. Similarly, the government needs more control over the communication infrastructure in areas where left wing extremists operate. The state also takes ownership of ensuring connectivity where there is none.

India, meanwhile, has developed a 4G/5G stack—communication software and hardware that allow devices or phones to connect with a telecom service provider’s network. This stack has been co-developed by a consortium consisting the Centre for Development of Telematics (C-DoT), Tata Consultancy Services (TCS) and Tejas Networks. C-DoT is the department of telecommunications’ research and development centre.

“The government will need a telco, which can be, sort of a sandbox to try new things, new technologies. The 4G/5G stack that has been developed is unlikely to be adopted by the private players for various reasons. But BSNL is adopting it, and it will be available for global players,” said a second government official, asking not to be named.

Task ahead

Top executives at BSNL said that they are aware of what needs to be done, going ahead.

“We will do everything that needs to be done. We will increase our marketing budget to 8-10% of annual revenue, which is the industry standard, from about 3-4% that we are spending now,” P.K. Purwar, chairman and managing director of BSNL, said.

Purwar has been heading BSNL since 2019. He also became the head of sister telco Mahanagar Telephone Nigam Limited (MTNL) in 2020. While BSNL provides services across India barring Delhi and Mumbai, MTNL just operates in these two metros.

“There will be a complete overhaul. Customer facing systems, technical systems and human resource systems—all will be overhauled, one by one,” Union minister Vaishnaw said.

BSNL will commercially launch 4G services only after it has tested about 20,000 4G sites at one go—up from 200 sites that it is testing at the moment. For 4G equipment for 100,000 sites, BSNL has placed an order worth ₹19,000 crore.

Winds of change

BSNL, today, has 62,000 employees. To turn around the company, its work culture needs a revamp. But that is easier said than done. Unlike private sector companies, BSNL cannot hire and fire at will or even based on performance or annual appraisals. The company has four recognized employee unions and a few associations. These unions occasionally threaten strikes. In 2019, for instance, the unions called for a hunger strike, alleging that the management was forcing employees to opt for voluntary retirement.

But senior executives at the company do see winds of change. Several employees did opt for voluntary retirement, which was offered as part of the revival packages. “Now, most of the employees are under the age of 50. It’s a much younger workforce than before,” said one of the executives Mint spoke to. He didn’t want to be identified.

A second executive, who also declined to be identified, pointed to a new system of e-filing— government files in electronic form—available to officials at any given time. “That system has made decision making much faster than before as well as execution,” he said.

He added that work from home during the covid-19 pandemic years also benefited the telco. The regular 9am-5pm work hour paradigm changed and was replaced by round-the-clock availability of personnel. That sped up decision making and execution.

Union minister Vaishnaw would hope that this hard work and the new-found rigour in decision making reflects in the numbers soon—in higher revenue and profit, lower debt, and more customers.

Updated: 22 Jun 2023, 12:57 AM IST