Key Reasons for BSNL’s continuous loss and doomed fortune

BSNL (Connecting India) is a well known Indian telecom brand and it was the world’s 7th largest telecommunication company. It is a fully Indian government-owned company reporting to the DOT i.e. Department of Telecommunication, Government of India.

But, recently I read a news about Bharat Sanchar Nigam Limited i.e. BSNL is struggling to pay the staff’s salary for the month of February 2019 because they don’t have the money and going through the worst financial situation. They seek 3500 crore credit from the bank to pay their staff. This is a very shocking and alarming situation of the government companies in India. I thought to do some research on the real reasons behind BSNL’s continuous loss and share it with you all via a blog.

BSNL loosing money

If I go back to past a little, I still remember that BSNL had huge popularity and good trust among people. There were not even too many competitors for it in this telecom sector. If you look at the company’s strength; BSNL still has 1,74,216 staff as of December’ 2018, more than 66000 mobile towers and it is running under the Department of Telecommunication, India. Looking at all these circumstances, BSNL should have been one of the leading and profit-making telecommunication company in India. It also has more than 52% of overall wired telephony service and has the presence in almost all rural places in India.

wired market share of BSNL

So, the question is; what changed so fast for BSNL that changed its fortune even with full government support and huge available infrastructure? who is responsible for BSNL’s poor growth and making it a sinking ship? Why it has failed to stand against the private telecom companies like Airtel, Vodafone, Reliance, etc.

In my view; BSNL itself is responsible for it’s today’s condition and somewhere it is the victim political/government negligence. Before we go to any conclusion, I would like to ask below question to you; for giving you an overview of BSNL’s weak market strategy or simply carelessness in completing the private telecom companies in India.

  • Had you tried buying a BSNL SIM? When all other private companies were selling pre-activated SIM, people had to go to BSNL office and wait for hours to get the BSNL SIM.
  • When you go out in the market, you will see too many banners for JIO, Airtel, Vodafone, and other private telecom providers and there would be a lot of small shops where you can easily get SIM of these telecom provider companies. How many banners promoting BSNL or shops you found selling BSNL SIM? probably very less.
  • Have you visited the BSNL website? Where all other websites are more user-friendly with latest features, BSNL still struggling with the outdated version.

Do the management and Staff in BSNL has the typical government staff mentality with a lack of motivation or interest in their work? Do the management lack proper strategy or well-planned operation to compete in the current telecom market? Is the government really supports BSNL or government-owned companies? You might be having more question similar to this which you may mention in the comment for further discussion and public awareness.

Following are some of the key reasons for BSNL’s current condition.

1. Huge staff with higher salary:

BSNL has around 167216 staff i.e. more than Vodafone and Airtel combined. Minimum salaries of the BSNL gets around 35000/- which is far more than what private company staff gets and it gets increased periodically based on time spent in the company and other factors.  I wish if they had an appraisal process for a salary hike and to kick low performer out from the company like the typical private company has. ? It is reported that BSNL is paying more than half i.e. 52% of it’s earning in staff salary whereas private companies reported paying even less than 10% of their earning.

BSNL also has the look towards the retired staff’s pension and health benefits which add more expense to carry every year.

Moreover, I would avoid commenting on BSNL’s staff’s skills, productivity and their motivation towards work (poor salaries to operational level staff, career progression depends more on caste, ability to bribe, boot licking, etc hence lower motivation levels and morale resulting lower productivity). Also, having huge staff count will not help unless they are well trained with the latest technologies and committed towards work.

2. Massive expense on wired line:

BSNL has to provide the wire-line connection to all rural area which adds huge investment and staff in setup and maintenance. BSNL’s spending is far more than what it takes to provide the telephone service in rural areas of India. Being a government-owned company, BSNL has no choice to follow what is asked for by the DOT or Indian government. Also, people prefer mobile over landline due to various reasons which make wire-line telephony service loss-making division.

3. Lack of marketing strategy to retain and gain more customers:

BSNL’s subscribers count fell down drastically over the recent years because of various reasons like poor service and management, lack of interest in customer satisfaction, higher call rate and customer issue avoidance. BSNL still not focusing or putting many efforts in marketing to acquire more user base.

I have heard about the customer service attitude in some offices which is totally careless and they may even shout at you as they have the power to do so as government staff. where all other private telecom companies are making different strategies and surveys to understand what customer wants and how they can acquire more customers, BSNL at other end is hardly coming out with anything.

4. Lack of Innovation in product or services:

BSNL still lacks variety in their product or services. Where private telecom providers keep on introducing various types of the plan or bundled (mobile + landline + TV etc.) services for all kind of users, BSNL has limited options. Hope in future they will learn from these companies and provide various options. BSNL is losing people’s interest in their products due to lack of product or service options to choose from.

Also, lack of advanced technology implementation in their operations, it’s difficult for them to optimize their operational cost which adds more burden to their overall revenue hence the overall net profit.

5. Delay in management decision and lack of Government Support:

BSNL was always the victim of poor or delayed management decision on various business strategies. It also has a bad experience in getting the government approvals on time when they tried to expand the business or compete with other telecom companies. BSNL was about to be the first 4G provider in India but it wasn’t allowed by the Indian government and it was put on hold until the big private companies like Reliance, Airtel and Vodafone started and became leaders in the 4G market. The government didn’t give spectrum to BSNL to be the first telecom provider to provide the 4G and LTE network however, the private companies easily got it.

Looks the below irony of Indian Government and DOT:

  • On 10 April 2012, Airtel launched 4G services through dongles and modems using TD-LTE technology in Kolkata, becoming the first company in India to offer 4G services.
  • On 8 December 2015, Vodafone announced the rollout of its 4G LTE coverage in India on 1.8 GHz and 2.1 GHz bands starting from Kochi.
  • 5 September 2016 Reliance Jio publicly launched 4G service.
  • BSNL just got DOT’s nod (in the year 2019) to start 4G service pan-India but still cannot comment on the exact date of launch, however, they have recently rolled out 4G in Kerala and Karnataka i.e. in the year 2018 when all private companies have already got a good hold in the market.
  • BSNL currently has 5Mhz of the spectrum on 800 Mhz bands. But for an all India scaling- up of 4G service rollout, it needs at least a cumulative 10Mhz radio-waves. In Rajasthan, the PSU will use 4G spectrum which it has on 800 Mhz bands as per the plan.

All these issues have resulted in a huge drop in the overall mobile subscription of BSNL and resulted in poor company growth. Bellow are the latest subscriber market share of BSNL and major private telecom providers. It is very sad to see the BSNL + MTNL’s combined market share is 10% where all other telecom companies have more than or around 30% share.

BSNL's wireless operation

Even though BSNL is a government-owned company, DOT is not investing money in BSNL’s expansion or towards its growth. It’s little difficult to understand, how private companies like Jio, Airtel or Vodafone is able to grow so fast and being government-owned company BSNL is still struggling to make a profit.

Have a look at the recent revenue growth. In spite of having a big staff base, good mobile tower reach and being an Indian government-owned company, it’s revenue is far less than the private provider like Airtel and Vodafone. Even newly entered Jio is generating more revenue than BSNL.

BSNL revenue growth

Governments interest towards private companies than it’s own:

Giving Jio SIM to all railway government staff:

Railways have been using Airtel for over six years as its telecom provider for 195000 mobile phone connections used by its employees in the closed user group (CUG) across the country for which the railways paid around Rs 100 crore bill per year.

Its validity will expire on December 31, 2018, and Jio will take over to serve 378000 personnel of the Indian railways. and the government might be paying more than 100 crores every year to Jio now. This could have been simply given to BSNL to help in recovering from its financial crisis. Will BSNL SIM be provided to only areas where only losses are expected? Can’t comment on the government’s intention here.

To summarize, BSNL itself is responsible for its current condition and also, the government’s negligence towards BSNL’s growth has also played a key role in its doomed fortune. The government seems to be giving more preference to private companies than the government companies. They could simply make the government companies sufficient and capable enough to generate more profit for the government which could definitely help the country to grow and stand with other developing countries. What’s your take on this? Please share your view on this, I would love to read.

Thank you for reading and God bless you. ?

The article is totally my view and content are based on research done over the internet. I may be missing some points here, therefore, feel free to share your comments so that the overall article could be improved for public awareness

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