The BSNL Story: Growth, Downfall & Revival
đInsights
BSNL (Bharat Sanchar Nigam Limited) was incorporated on 1st October 2000 by the Government of India under the ownership of the Department of Telecommunications, Ministry of Communications. The largest government-owned wireless telecommunications service provider in India is headquartered in Delhi. The Chairman and Managing Director of BSNL is a government civil servant of the Indian Communication Finance Service or a central government engineer of the Indian Telecommunications Service.
As of April 30, 2024, BSNL Mobile boasts a subscriber base of 88.94 million, ranking as the 4th largest mobile telecommunications network in India and the 25th largest globally. The revenue of BSNL was INR 21,317 crore for FY23-24.
Although BSNL began strong and recorded profits for the first few years of its operations, it began recording losses after the year 2009. The company has recorded consistent losses in the last thirteen years of its operations. BSNL has reported a net loss of INR 5367 crore for the year ending March 31, 2024.
History
Why BSNL Failed?
Revival Efforts
Products and Services
Conclusion
History
BSNL owes its emergence to British India. It was the British who laid the foundation of the telecom network in India in the 19th century, establishing the first telegraph line in 1850 between Kolkata (erstwhile Calcutta) and Diamond Harbour. Within the next four years, the British East India Company laid telegraph lines across the country and opened the service to the masses in 1854. A year later, the British Imperial Legislative Council passed the Indian Telegraph Act.
Post Indiaâs independence in 1947 the Post and Telegraph departments were bifurcated in the 1980s and the Department of Telecom was established. This eventually led to the emergence of government-owned telegraph and telephone enterprises, culminating in the foundation of BSNL.
Why BSNL Failed?
Founded at the turn of the century, BSNL successfully grew and expanded to reach annual revenues of approximately INR 40,000 crore in March 2007, compared to Airtelâs at INR 18,420 crore. Within the next two years, however, the PSUâs profits nosedived by 81% and its revenues fell by 6%. Since then, BSNL continued ailing year after year and by 31st March 2022 had dredged up losses to INR 57,671 crore according to Devusinh Chauhan, Minister of State for Communication. By the end of October 2023, BSNL had experienced a cumulative loss of 21.4 million subscribers over 22 consecutive months, reducing its total subscriber count to just 92.87 million. The primary reasons for the continued downfall of BSNL are:
Tough Competition
Commanding a 21% market share in 2005, similar to that of Bharti Airtel, BSNL began losing its ground in 2009 consistently, and by 2022, its market share had plummeted to a mere 7.9%. The rest 92% of the market was controlled by three major players â Jio, Vodafone Idea, and Bharti Airtel. The other major reason was the price war. Jio entered the telecom market with extremely cheap tariffs forcing all private and public players to reduce their tariffs. BSNL, however, did not raise their tariffs with the subsequent increase by Jio and other players resulting in a drop in their average revenue earned by users per month to INR 53 from INR 118.
Bureaucratic Function
Slow decision-making and a lot of red tape plagued the PSU. It eventually resulted in the company not being able to compete with private player competitors. Opposition from unions, failure to update equipment quickly, and repeated and unchecked government interference also played a significant role in BSNLâs decline.
High Employee Cost
While the company was battling the rising market competition, it was also plagued internally with high employee maintenance costs. This cost accounted for approximately 55% to 60% of the companyâs expenditure.
Ipsita Acharya
Revival Efforts
The central government, in the past three years, has taken proactive steps to rescue the debt-ridden PSU from closing its doors permanently. Devusinh Chauhan, Minister of State for Communication said that in October 2019, the Centre had approved a revival plan that included a reduction in employee costs through a Voluntary Retirement Scheme (VRS), debt restructuring by the raising of sovereign guarantee bonds, administrative allotment of spectrum for 4G services through capital infusion, monetization of core and non-core assets and in-principle approval of the merger of BSNL and MTNL. He said, âAs a result of these, BSNL and MTNL have become EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) positive since the financial year 2020-2021.â The merger of BSNL and MTNL, however, has been delayed due to the formerâs high debt.
By July 2022, the Centre approved a second revival package for BSNL of INR 1.64 lakh crore aiming to upgrade the PSUâs services, allocating spectrum, de-stressing its balance sheets, and augmenting its fiber network by merging BBNL with BSNL.
On June 7, 2023, the Union Cabinet approved the much-awaited third revival package for BSNL, valued at over INR 89,000 crore. With this approval, BSNL's authorized capital has significantly increased from INR 1,50,000 crore to INR 2,10,000 crore. The Cabinet, chaired by PM Narendra Modi, has also granted BSNL a valuable allocation of 4G and 5G spectrum. These spectrum bandsâ700 MHz, 3,300 MHz, 26 GHz, and 2,500 MHzâare worth INR 46,338.60 crore, INR 26,184.20 crore, INR 6,564.93 crore, and INR 9,428.20 crore, respectively. BSNL's goal is to expand 4G coverage to rural areas, offer high-speed internet through fixed wireless access (FWA) services, and support captive non-public networks (CNPN). This is indeed a major step forward for BSNL and the future of telecom services in our country.
âThe first two packages brought BSNL out of a very difficult situation to a stable one. Now, BSNL should become a player that is able to bring connectivity to places where other commercial companies will not be able to go,â said Telecom Minister Ashwini Vaishnaw.
Products and Services
The government-owned entity provides both fixed-line telephones and mobile services on the GSM platform operating under the brand name CellOne and BSNL across the country.
BSNL Mobile
Offering prepaid and postpaid mobile services, BSNL Mobile also provides value-added services like Free Phone Service, India Telephone Card, Account Card Calling, Virtual Private Networks, Tele-voting, Premium Rate Service, and IPTV for its customers to enjoy television through the internet and VVOIP (Voice & Video Over Internet Protocol).
BSNL Landline
It was the only fixed-line telephone service that was launched in the early 1990s in the country. Only BSNL and MTNL, the other government-owned entity, were allowed to provide landline phone services in the country. BSNL and MTNL held 37.4 percent of the landline market share as of August 31, 2022, and 6.14 million users of BSNL in December 2023.
Internet
With approximately 7.5 lakh km of fiber-based telecom network across the country, it is the fourth largest ISP (Internet Service Provider) in India.
Broadband
The companyâs broadband services include fixed-line and landline services using CDMA technology, providing internet access services through dial-up connections as prepaid, NetOne as postpaid, and DataOne as broadband.
Bharat Fibre
Launched in 2019 February, Bharat Fibre offers IPTV, VoD (Video on Demand), VoIP (Voice over Internet Protocol), AoD (Audio on Demand), BoD (Bandwidth on Demand), remote education, video conferencing services, interactive gaming, Virtual Private LAN Services.
Bharat Net
In a revival effort, BSNL was merged with the governmentâs special purpose vehicle BBNL along with a package of INR 1.64 lakh crore. It gave the PSU an advantage of an additional 5.67 lakh km of optical fiber laid across 1.85 lakh village panchayats using the Universal Service Obligation Fund (USOF).
4G Service
In January 2019, the public sector unit started the 4G services in a few cities and towns in the states of Bihar, Jharkhand, and Uttar Pradesh.
5G Services
BSNL CMD PK Purwar said in an interview that BSNL would begin 5G operations by 2025. Adhering to the Government of Indiaâs âAtmanirbhar Bharatâ, its 4G and 5G networks are set to be completely home-grown Indigenous technology.
Conclusion
Chauhan infused confidence in the PSU by saying â âWith the implementation of these measures, BSNL is expected to turn around and become a profit-earning entity.â BSNLâs journey, by no means, has been easy. Its profit-making operations quickly took a sharp downturn due to reasons that were, probably, avoidable. However, with the Central Governmentâs strong backing, the PSU is set to make a stronger come-back than before.
FAQs
Who is the owner of BSNL?
BSNL (Bharat Sanchar Nigam Limited) was incorporated on 1st October 2000 by the Government of India under the ownership of the Department of Telecommunications, Ministry of Communications. BSNL is a 100% Govt. of India-owned Public Sector Undertaking with an authorized share capital of Rs. 1,50,000 crores.
What is the net worth of BSNL?
The net worth of BSNL as of 31 March 2024 is INR 106625 crore.
Is BSNL all over India?
BSNL Mobile has a pan-India presence with a presence in all 22 telecom circles in India. It is the fourth largest mobile network operator in India.
Is BSNL planning to launch 5G?
BSNL CMD PK Purwar said in an interview that BSNL would begin 5G operations by 2025.
How does the revival package affect BSNL's authorized capital?
The third revival package has increased BSNL's authorized capital from Rs 1.50 lakh crore to Rs 2.10 lakh crore.
Which is the cheapest mobile recharge plan of BSNL?
The minimum BSNL validity recharge is 15 days at âš36. This recharge plan will give you free calls, data, and SMS at the lowest cost.
