The BSNL Story - Growth, Decline & Revival

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.

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 and at last count, the total losses had mounted up to an amount of INR 1.02 trillion.

History
Reasons for the Fall
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 19^th 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 India’s 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.

Reasons for the Fall

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 Airtel’s which were at INR 18,420 crore. Within the next two years, however, the PSU’s profits nosedived by 81% and its revenues fell by 6%. Since then, BSNL continued ailing year after year and by 31^st March 2022 had dredged up losses to INR 57,671 crore according to Devusinh Chauhan, Minister of State for Communication. The primary reasons for the continued downward trajectory of BSNL are –

Tough Competition

Commanding a 21% market share in the year 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 10%. The rest 90% of the market was controlled by three major players – 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 tapes 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 BSNL’s 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 company’s expenditure.

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, “As a result of these, BSNL and MTNL have become EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) positive since the financial year 2020-2021.” The merger of BSNL and MTNL, however, has been delayed due to the former’s high debt.

By July 2022, the Centre approved a second revival package for BSNL of INR 1.64 lakh crore aiming to upgrade the PSU’s services, allocating spectrum, de-stressing its balance sheets, and augmenting its fibre 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 Rs 89,000 crore. With this approval, BSNL's authorized capital has significantly increased from Rs 1,50,000 crore to Rs 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 bands—700 MHz, 3,300 MHz, 26 GHz, and 2,500 MHz—are worth Rs 46,338.60 crore, Rs 26,184.20 crore, Rs 6,564.93 crore, and Rs 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.

“The 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,” 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.

What gave rise to the Mobile Industry in 2020?

The mobile industry is an industry which has witnessed a massive growth in 2020. Lets dive deeper to understand what gave rise to it.

StartupTalkyManav Makhija

BSNL Mobile

Offering prepaid and postpaid mobile services, BSNL mobile also gives 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. As of February 2021, BSNL claimed a 47.20% market share with 9.55 million customers.

Internet

With approximately 7.5 lakh km of fibre-based telecom network across the country, it is the fourth largest ISP (Internet Service Provider) in India.

Broadband

The company’s 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 government’s 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 fibre 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

Ashwini Vaishnaw, honorable Minister of Communications has announced that BSNL  would begin 5G operations by 15th August 2023. Adhering to the Government of India’s ‘Atmanirbhar Bharat’, its 4G and 5G networks are set to be completely home-grown indigenous technology.

Conclusion

Chauhan infused confidence in the PSU by saying – “With the implementation of these measures, BSNL is expected to turn around and become a profit-earning entity.” BSNL’s 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 Government’s strong backing, the PSU is set to make a stronger come-back than before.

FAQs

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?

The Telecom Minister, Ashwini Vaishnaw, said the 4G network of BSNL will be upgraded to 5G by November–December 2023.

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 ₹36. This recharge plan will give you free calls, data, and SMS at the lowest cost.