You are here
Home > Latest Posts > National Affairs > BSNL is fast losing its place in emerging telecom market

BSNL is fast losing its place in emerging telecom market

While the wireless telecom market is growing fast in India, the Bharat Sanchar Nigam Limited (BSNL) is sliding fast in its service credibility and market share. The country’s overall rural wireless subscriber base increased to 528.48 million at the end of December 2018 compared to 521.59 million at the end of September 2018. The urban wireless subscriber base though declined marginally to 647.52 million from 647.70 million during the reported period. On the back of increase in rural subscribers, the percentage share of rural users increased to 44.94% in the overall wireless subscriber base. But in both the markets BSNL has continuously been a loser in last few years. BSNL has been making losses during the last five years. It has been now been overtaken by private operators areas.  in both the rural and urban areas. BSNL has lost its place of prestige as preeminent player in the telecom market because of lack of modernization , slow decision making, lack of thrust to upgrade infrastructure and human resources while private playerso have spread their reach with better tariffs and marketing skills.

BSNL has lost more than half of its wireless market share in rural areas in the last 10 years to private operators. As per data put out by Telecom Regulatory Authority of India (Trai), BSNL’s wireless market share in rural areas stood at 6.82% at the end of December 2018 against 15.36% at the end of June 2009.Even Reliance Jio, which launched its services in September 2016, has a higher rural market share than BSNL’s at 19.01%.

Today, Vodafone Idea is the leader in rural areas with a market share of 41.76%, followed by Bharti Airtel at 31.91%. In terms of percentage of rural subscribers in overall user base, BSNL ranks after the three private operators,   right at the bottom. Vodafone Idea has 52.71% rural subscribers in its user base, followed by Bharti Airtel with 49.56% and Reliance Jio at 35.87%. The share of rural subscribers in BSNL’s overall user base stands at 31.51%.

The private operators started venturing into rural areas with teledensity saturating in urban areas, they devised innovative packages for these markets too, and BSNL was not able to defend its turf. One of the most important reasons  for the decline of in rural market share of BSNL in recent times could be lack of 4G spectrum as people in rural areas also want access to high-speed internet. BSNL is finding it difficult to match  private operators which have got the latest infrastructure and technology. Unfortunately, there are not enough revenues to protect or expect for the state-run firm in rural areas. This

The woes of the BSNL do not end here. At its board meeting in March, an expert panel presented 10 proposals and three out of these have been approved by the state-owned telecom service. Due to a financial loss, telecom operator Bharat Sanchar Nigam Limited (BSNL) is likely to lay off as many as 54,000 employees from its workforce. Other proposals that were approved by the board include reduction of retirement age from the present 60 years to 58 years, Voluntary Retirement Scheme (VRS) for all employees aged 50 and above, and expediting the allocation of 4G spectrum to BSNL.

The VRS scheme and sacking employees is likely to have a huge impact on the employees as well as the ongoing elections therefore, it was decided to wait for the final call of the new government. The BSNL has a robust workforce of around 1,74,312 and removing 54,000 employees will see a 31% reduction in its workforce.

It is not that BSNL is making huge losses only, its productivity has also declined over the years. In February this year the company had incurred a loss of Rs 7,993 crore during the 2017-18 financial year. It is notable that BSNL became staff heavy over the years and therefore its productivity declined. Both PSU telecom companies BSNL and MTNL are both facing the burden of high salaries to their more than proportionate staff. Heavy salaries have become a heavy burden due to their bloated headcounts. BSNL has the largest number of employees among all the telecom operators, but, the company handles only 650 customers per employee, while MTNL handles just 160. These indicate far less productivity than their private sector peers. The companies are now expecting a bailout package from the government and thinking of monetizing assets for their survival.

Nothing is expected now before the elections. But it is a moot question whether government really would take decisive moves to rejuvenate the BSNL or move forward for its privatization. Telecom is an strategic sector and many believe that leaving telecom market completely to private sector has its own strategic risks. Other feel that the quality of service of BSNL cannot improve until and unless government offloads its share in it and right sizes the telecom operator. There is criticism from opposition parties that government is deliberately crippling the BSNL to help the private operators to gain market share. Whatever be the truth, it needs to be kept in mind that BSNL is one of the major employment providers in the core sector and its death would be a blow to an important PSU.

Leave a Reply

Top