However, there is a catch with
4G services. Harsh Walia, Part-
ner at law firm Khaitan & Co, says
while 4G has a notional benefit of
garnering customers, BSNL doesn’t
really need 4G at the moment. “Tel-
cos claim they have reached so many
villages but it’s like electricity. Most
villages in India have an electricity
pole but not every house is lit. The
next round of growth will come
from rural where telecom penetra-
tion is still low. Rural focus is the
way to go,” he says.
“Forget about the new initia-
tives, BSNL might be walking on
thin ice as areas in which it has ex-
pertise are losing ground. Its strong
wireline business is witnessing a
rapid shift as consumers move to
mobile phones for all pur poses,” says
a telecom consultant.
Over the years, tens of commit-
tees and reports and hundreds of
consultants have f lagged the cri-
sis. The problem remains unfixed
though. Despite being well aware of
the mess, the government seems to
have no meaningful way to improve
the situation. All it seems to be do-
ing is throwing good money after
bad and waiting for the impossible
to happen.@manukaushik58 I BUSINESS TODAY I August 11 I 2019CORPORATE > BSNLWhat’s Next?
The situation has reached a point
where the government doesn’t re-
ally know how to fix the problem
and BSNL may become a worse case
than national carrier Air India. In
the telecom business, upgrading
networks is critical to survival, and
without sufficient funds, the PSU
may start losing customers at an
even higher pace.
Telecom Minister Ravi Shankar
Prasad has been supportive of the
idea of revival but it seems that even
he’s in a dilemma. If the government
decides to shut down BSNL and
MTNL, it will cost the exchequer
about `1.2 lakh crore (as money for
VRS and other costs).
Disinvestment seems unlikely
given the state of the telecom sector.
Also, unions have opposed several
stake sale proposals in the past. A
bailout package costs much less but
there’s no guarantee it will f ly, es-
pecially with the approach that the
company plans to take, say experts.
For instance, the 4G market, where
BSNL intends to enter, has already
been captured by private telcos with
large network coverage. As per mo-
bile analytics firm OpenSignal, Jio
has 97.5 per cent 4G/LTE coverage.
BSNL, if it rolls out 4G, will remain
an also-ran.
It’s a chicken-and-egg situation
at MTNL, which operates in Delhi
and Mumbai with a subscriber
base of 6.67 million across wire-
line and wireless segments. In
comparison, Jio, which started a
lot later than MTNL, has 27 million
wireless subscribers in these cir-
cles. Because of its severe finan-
cial condition over the past sev-
eral years, MTNL has been going
slow with network upgrade, whichis affecting its ability to retain
and grow the subscriber base.
Inability to invest in networks
has taken down players such as
Reliance Communications in the
past. MTNL has a large share in
wireline and broadband markets,
which remain far less competi-
tive than the wireless segment.
Non-availability of 4G services,
just like BSNL, puts MTNL in a dis-
advantageous position, especiallyat a time when private operators
are talking about transition to 5G.
In order to compete — and even
survive — the telco needs urgent
capital from the government, a
point that has been highlighted
by MTNL CMD P.K. Purwar. Its abil-
ity to generate resources from
operations and plough it back
to add subscribers and improve
quality of services remains fairly
restricted.MTNL: IN RED
THE REVIVAL OPTIONS
The government is working on a
`74,000-crore bailout for BSNL
and MTNL. `20,000 crore will
be given for 4G spectrum while
`13,000 will be the rollout cost
and `40,000 will be used for
early retirement of employeesThe plan is to reduce the retire-
ment age from 60 to 58. The cur-
rent workforce is over 1.63 lakhShutting down will result in a cost
of `1.2 lakh crore for VRS;
disinvestment is unlikely to
generate interestAccording to Telecom Minister Ravi
Shankar Prasad, BSNL’s
role is to bring sober equilibrium
in the sectorAND WHY THEY
MAY NOT WORKUnions will oppose any plan to cut
employee costsIts average revenue per user is low
at `41 while the industry
average is ` 70It does not have 4G spectrum, a must
for offering high-speed services