Hyper competitive environment can be blamed for the woes of this sick PSU. The situation also shows how lack of agility can pull a firm down.
Published: 03rd April 2019 04:00 AM | Last Updated: 03rd April 2019 07:43 AM
Published: 03rd April 2019 04:00 AM | Last Updated: 03rd April 2019 07:43 AM
Recently, BSNL, the state-owned telecom PSU, was in the news for
failing to pay salaries to its 1.7 lakh employees for February. The
Centre’s action to ensure that employees are not affected, at least
for the immediate future, must assuage the employees.
failing to pay salaries to its 1.7 lakh employees for February. The
Centre’s action to ensure that employees are not affected, at least
for the immediate future, must assuage the employees.
BSNL, which was a Navaratna company just 10-12 years ago now
has over Rs 90,000 crores of accumulated losses. The new
government should takesome significant steps to get BSNL back
on track. The wage bill for BSNL and MTNL (the state-owned telco
providingservices in Delhi and Mumbai) is about 60 per cent of the
revenue.
This was about 20-22 per cent 12 years ago. Over the past several
years the wage bill increased
while the revenue has been stagnant or reducing. Meanwhile,
private telcos operate at 9-14 per cent wage bill as a percentage of
their revenue.
has over Rs 90,000 crores of accumulated losses. The new
government should takesome significant steps to get BSNL back
on track. The wage bill for BSNL and MTNL (the state-owned telco
providingservices in Delhi and Mumbai) is about 60 per cent of the
revenue.
This was about 20-22 per cent 12 years ago. Over the past several
years the wage bill increased
while the revenue has been stagnant or reducing. Meanwhile,
private telcos operate at 9-14 per cent wage bill as a percentage of
their revenue.
While the hyper competitive environment can be blamed for the woes
of this sick PSU, the situation also shows that poor management and
lack of agility can pull down any profitable organisation rapidly. A
recent report shows how
the paltry productivity of BSNL/ MTNL compares with their private
peers. On an average, each employee of the PSU manages about
500 subscribers,
while the private telcos manage 20,000 to 28,000 subscribers per
employee.Interestingly, even China’s state-run mobile operator,
China Mobile is better
than BSNL in this parameter. China Mobile has a base of a whopping
90 crore
subscribers and its employees handle over four times the subscribers
compared to the BSNL staff.
The merger of BSNL and MTNL has been on the cards for some time,
but successive governments have failed in taking action.
of this sick PSU, the situation also shows that poor management and
lack of agility can pull down any profitable organisation rapidly. A
recent report shows how
the paltry productivity of BSNL/ MTNL compares with their private
peers. On an average, each employee of the PSU manages about
500 subscribers,
while the private telcos manage 20,000 to 28,000 subscribers per
employee.Interestingly, even China’s state-run mobile operator,
China Mobile is better
than BSNL in this parameter. China Mobile has a base of a whopping
90 crore
subscribers and its employees handle over four times the subscribers
compared to the BSNL staff.
The merger of BSNL and MTNL has been on the cards for some time,
but successive governments have failed in taking action.
Way back in 2009, the government tried to encourage BSNL by
providing 3G
spectrum before the auction was held for private players. But BSNL
could not
make any impact with the head start. There was no such luck for
BSNL when
it came to the 4G spectrum. The lack of 4G offering has put BSNL
on the
backfoot. After Reliance Jio’s entry, private players are competing to
provide
better rates for the subscribers. And all this while, BSNL’s services
have been
limited to just 2G and 3G. This has been a huge disadvantage for the
PSU.
BSNL and MTNL account for less than 10 per cent of the wireless
subscriber
base. And BSNL has not been able to match the private players
when it
comes
to marketing their services.
providing 3G
spectrum before the auction was held for private players. But BSNL
could not
make any impact with the head start. There was no such luck for
BSNL when
it came to the 4G spectrum. The lack of 4G offering has put BSNL
on the
backfoot. After Reliance Jio’s entry, private players are competing to
provide
better rates for the subscribers. And all this while, BSNL’s services
have been
limited to just 2G and 3G. This has been a huge disadvantage for the
PSU.
BSNL and MTNL account for less than 10 per cent of the wireless
subscriber
base. And BSNL has not been able to match the private players
when it
comes
to marketing their services.
Bureaucracy and slow decision making during equipment purchase
and
managing contracts, and inadequate management flexibility in pricing
plans
and challenges around vendor management contribute to BSNL’s woes.
Added
to all this, BSNL staff are indifferent when it comes to customer retention.
and
managing contracts, and inadequate management flexibility in pricing
plans
and challenges around vendor management contribute to BSNL’s woes.
Added
to all this, BSNL staff are indifferent when it comes to customer retention.
In fact BSNL has tried to implement the FTTH (Fiber to the Home)
connectivity
through vendors, but it has not been a smooth ride. The back-and-forth
between
BSNL and the vendors puts the subscribers in a spot. Perhaps, BSNL
needs to
learn from the private telcos on how to handle managed services from
vendors.
connectivity
through vendors, but it has not been a smooth ride. The back-and-forth
between
BSNL and the vendors puts the subscribers in a spot. Perhaps, BSNL
needs to
learn from the private telcos on how to handle managed services from
vendors.
Notwithstanding the shortcomings, BSNL still commands the highest
market
share in wireline broadband with lakhs of kilometers of optical fiber
cable
across
the country. It has infrastructure/towers and a talented workforce. This
means
the PSU can rise again. The government’s actions must go beyond the
tactical
bailout package which is being worked out.
market
share in wireline broadband with lakhs of kilometers of optical fiber
cable
across
the country. It has infrastructure/towers and a talented workforce. This
means
the PSU can rise again. The government’s actions must go beyond the
tactical
bailout package which is being worked out.
Perhaps the government should learn from Telstra of Australia and
British
Telecom of the UK. They are great examples where the government
control
was drastically reduced. The companies are listed in the stock exchange
and
have improved and agile management structure. They are now
accountable to shareholders. Despite stiff competition, both the
companies have performed
exceedingly well. The Centre should consider a stake sale and bring in
management talent and create a professional board. Accountability
must be enforced.
British
Telecom of the UK. They are great examples where the government
control
was drastically reduced. The companies are listed in the stock exchange
and
have improved and agile management structure. They are now
accountable to shareholders. Despite stiff competition, both the
companies have performed
exceedingly well. The Centre should consider a stake sale and bring in
management talent and create a professional board. Accountability
must be enforced.
It is estimated that the land assets owned by BSNL is worth over
Rs 70,000
crore. The government must create the right checks and balances to
monetise
the amount either by selling the assets or leasing them out. It must
conduct an
audit of the active infrastructure being used by BSNL and suggest
means of
improving the unutilised/under utilised assets. The company must
soon find
ways of offering next gen technologies. News reports suggest that
BSNL
could take a lead on 5G. That is heartening. However, keeping in mind
the
company’s track record, implementation could be a cause for worry.
Rs 70,000
crore. The government must create the right checks and balances to
monetise
the amount either by selling the assets or leasing them out. It must
conduct an
audit of the active infrastructure being used by BSNL and suggest
means of
improving the unutilised/under utilised assets. The company must
soon find
ways of offering next gen technologies. News reports suggest that
BSNL
could take a lead on 5G. That is heartening. However, keeping in mind
the
company’s track record, implementation could be a cause for worry.
The government must set a 18-24 month goal of right sizing the
workforce and
bringing in efficiencies using industry benchmark on productivity.
The
government should look beyond voluntary retirement schemes.
It should
actively encourage entrepreneurship amongst employees and
create a
platform for employees to come up with ideas. It can enable a
support
system
for localised content and solutions for the Indian market and
also utilise
the
start-up ecosystem for upskilling.
workforce and
bringing in efficiencies using industry benchmark on productivity.
The
government should look beyond voluntary retirement schemes.
It should
actively encourage entrepreneurship amongst employees and
create a
platform for employees to come up with ideas. It can enable a
support
system
for localised content and solutions for the Indian market and
also utilise
the
start-up ecosystem for upskilling.
The new government must play a pivotal role in creating and
implementing
a strategy to breathe life into the PSU. Genuine efforts are
needed to get
BSNL off life support.
implementing
a strategy to breathe life into the PSU. Genuine efforts are
needed to get
BSNL off life support.
G Krishna Kumar
ICT professional and columnist based in Bengaluru
Email: Krishnak1@outlook.com
ICT professional and columnist based in Bengaluru
Email: Krishnak1@outlook.com
