(57.86 per cent) among national op-
erators. This shows a higher num-
ber of irregular users.
What is particularly distressing
is that all this has happened despite
BSNL having one of the best infra-
structure, large footprint and wide
bouquet of services. For instance,
its optical fiber network of 7.5 lakh
route km is the longest among all
telcos. In comparison, Airtel has
2.5 lakh route km and Vodafone
Idea has 1.6 lakh km. It has spec-
trum in premium 900 MHz, 1800
MHz and 2100 MHz bands with a
consolidated holding of 421 MHz
across the country. Yet, the com-
pany’s market share in broadband
is just 4 per cent, far less than seg-
ment leader Jio’s 55 per cent.
“The decline in revenues is a
clear indicator that BSNL hasn’t
been able to monetise its infra-
structure efficiently,” says B.K.
Syngal, Senior Principal at Dua
Consulting, adding that interference by the DoT at
the micro level, and bad governance, have affected
the company in a big way. “In a market where telcos
are snowed under huge debt, BSNL has managed
to keep its debt low at about `14,000 crore. The is-
sue with BSNL is service standards and inability to
retain customers. On technology and connectivity,workforce, about 1.63 lakh, which it inherited mostly
from the Department of Telecom Services and De-
partment of Telecom Operations through which the
central government used to offer telecom services in
the domestic market. Private sector rivals like Vo-
dafone Idea and Bharti Airtel are much leaner with
9,883 and 8,453 permanent employees, respectively,
as on March 2018.
BSNL’s staff cost is over 75 per cent of its total in-
come as compared to 3-5 per cent for the private play-
ers. Ironically, with just one-third of BSNL’s employ-
ee cost (331 crore per month in 2017/18), Airtel pays its CEO Gopal Vittal 113 times more (16.97 crore)
than what BSNL pays its head (80,000-1.25 lakh a month). As early as February, the BSNL board had approved a VRS for over 54,000 employees and pro- posed reduction in the retirement age to 58 but faced stiff resistance from the finance ministry. The other big issue with the ailing telco is lack of 4G wireless services – except in three telecom circles – which makes it dependent on the low-paying 2G/3G custom- ers, and that too in rural areas, where the number of low-spending prepaid customers is higher. Typi- cally, the average revenue per user (ARPU) of 4G customers is higher than that of 2G/3G subscribers. For instance, Jio, which is a 4G- only operator, has ARPU of126 as
compared to BSNL’s 41. Low AR- PUs can seriously hit revenues and profitability – just like what hap- pened to Airtel and Vodafone Idea after Jio’s disruptive entry. BSNL hasn’t done enough to arrest the fall in ARPU, which stood at 52
in March 2018. It has been asking
for 4G spectrum in the 2100 mega-
hertz (MHz) band. The decision has
been pending with the department
of telecommunications (DoT) for
several months now.
To add to the problems, BSNL,
like other telcos, has been hit by
Jio’s onslaught. It has added the lowest number of
subscribers among all telcos in the past three years.
For example, it added just 2.2 crore subscribers be-
tween September 2016 and April 2019 as against
Jio’s 31.48 crore and Airtel’s 6.19 crore (most of it in-
organic). BSNL’s visitor location register, a metric to
count active subscribers on a network, is the lowest
56 I BUSINESS TODAY I August 11 I 2019CORPORATE > BSNLTotal operating
income24,57030,582-7,99 2-4,793Profit
after taxFigures in ` crore
Source: CARE RatingsFY17
FY18
OPERATING
LOSS WIDENED
SHARPLY IN FY18WHY BSNL IS IN
DIRE STRAITS
Focus on low-paying sub-
scribers in rural areas
as it offers only
2G/3G services
Large workforce; salaries
account for 75 per
cent income; for other
telcos, this is usually
3-5 per cent
Without 4G LTE services,
it can't compete with
private telcos in rural
and urban areas
Lack of full-time directors
on the board, especial-
ly for the finance job
Inability to cash in on
contracts for BharatNet
and defence sector
Poor governance issues
and involvement
of DoT
Sitting on accumulated
operating losses of
over `90,000 crore