Dt:29/7/22
Can “Packages” Save the Humpty- Dupmty BSNL ?
Dr T H Chowdary*
Academicians have attributed several traditional strengths to the public sector .
They primarily are:
-ability to survive without profit
-state-ownership gives than immortality
-wages and high bonuses can be paid over by continuously incurring losses
-government ownership gives full benefit of a monopoly
- Vasant Sathe,
Restructuring of Public Sector in India
Government in business means the ruination of people and if the Governments (or Public Sector companies) are rich, the people will be poor”
– Thiruvalluvar
Sri Ashwini Vaishnaw, Honourable Minister for Communications proudly announced the following give -aways to the consistently loss-making Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telecom Nigam Ltd (MTNL), the former wholly owned by the government while the MTNL has a few other investors, all these in a bid to turn around the loss -making telecom operators.
2. The record of BSNL:
· BSNL has suffered Rs. 50,632 cr losses in the last 5 years
· It posted Rs. 7,441 cr loss in 2020-21 and Rs. 15,500 cr in 2019-20
· The government had infused Rs. 70,000 cr in BSNL in 2019
· The BSNL will be given Rs. 1.64 lakh cr package in a bid to turn around the loss-making operator.
· Government will allot 900/1800 MHZ band spectrum worth Rs. 44,993 cr to help it expand its 4G services (while the private telephone companies are about to introduce 5G services where the speed of delivery of data is 10 times more than in the 4G services ).
· To help BSNL to meet its projected capital expenditure for the next 4 years, government will give BSNL Rs. 22,471 cr. Another Rs. 13,789 cr will be provided as viability gap funding for rural wireline operations done between 2014-15 , 2019-20. ( This is an arbitrary claim of the BSNL )
· The authorized capital of BSNL will be increased from Rs. 40,000 cr to 1.5 lakh cr in lieu of adjusted gross revenue (AGR) dues , provisions of CAPEX and allotment of spectrum
· To destress BSNL’s balance sheet, government will provide sovereign guarantee for the Telco to raise long term loans. It will enable the company to raise long term bonds for Rs. 40,399 cr and BSNL’s AGR dues of Rs. 33,404 cr which will be settled by conversion into equity.
“We promise according to our hopes.
We perform according to our abilities”
- A wise old saying
The amounts given as package to the consistently loss-making BSNL are humongous . This is the most reckless give- away of tax payers money to the “humpty-dumpty” like BSNL.
3. It is not understandable as to how the wise BJP -led NDA government can squander so much money of the people on hemorrhaging PSUs, the BSNL (and MTNL also). The amounts given to BSNL will be the single largest waste of money by a talent- studded BJP-led NDA government. No bank, no other public sector company was bestowed such huge money into the bottomless hole that the BSNL/MTNL are becoming.
4. Earlier packages and free allotments of spectrum had not saved this company. It effected the voluntary retirement scheme shredding about 80,000 employees. That has not saved the company from hemorrhaging . The present give-away may seem to be triumph of hope over the actual ability of BSNL / MTNL .
5. Government dithered in prolonging the life of Air India while every thinking person knew that that PSU could not be saved in the environment of competition from private airlines. Government had finally sold it to its emotional saviour , Tatas from whom it was taken over decades ago and run into losses year after year. It is quite certain that BSNL/MTNL as long as they are held by the government cannot be saved by any amount of infusion of precious government tax and debt raised money into these companies.
6. Has the government got any enforceable assurance from the present management of the BSNL that with all the money that is being gratuitously poured into this company, it will gain customers, become profitable and pay back its debt ? If the management fails to uplift the company, will they be penalized by say, withholding the pension of the managers? Have not there been assurances earlier from the management that the VRS and packages of money the company received would stem the losses and the company would be profitable?
7. Will the public be informed as to how many customers of BSNL/MTNL were lost year after year in the last 10 years and what is the ARPU ( Average Revenue Per User per month) for the last 10 years and what it is now (the R-Jio‘s ARPU currently is Rs. 180 )? What % of the subscribers are active for each of these companies; how many subscribers are there per employee, what is the revenue per employee and the pay put per employee per year ?
8. The amounts being given and the concessions being made for the BSNL/MTNL are unprecedented for any other public sector company in the country. For the last decade I have been submitting memoranda to the ministers and writing articles for public awareness that it is impossible for the state-owned company, BSNL to withstand competition from private companies. The main reason is that no person will lose his job if the company goes on failing. The company‘s policies and purchases of equipment are in the final analysis decisions of the Minister and the ministers in the past had hardly shown honesty of purpose and determination to achieve . Some ministers delayed the purchases of equipment by the BSNL/MTNL for so long so that these companies’ rivals in the meantime introduced new services and expanded the existing ones and the private companies grabbed the market. No minister has come to grief or had been held responsible for the failures of the BSNL/MTNL excepting Pt. Sukhram and D. Raja for a little while. The handling of the Communication Ministry by the DMK ministers was a total scam. One of them had even a private telephone system built for his private company utilizing the BSNL’s network, free of cost.
9. The interest of the country and the finances of the GOI require a study of the performance of the BSNL and the private telephone companies in regard to the parameters given in the table below.
Company |
Period |
Revenue |
Profit/loss |
Subscribers |
% Market share |
Staff/employees |
1 |
2 |
3 |
4 |
5 |
6 |
7
|
BSNL |
|
|
|
|
|
|
Air Tel |
|
|
|
|
|
|
R-Jio |
|
|
|
|
|
|
Voda-Idea |
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers per employee |
Subscribers added/lost
|
ARPU |
Staff cost as % of revenue |
Revenue per employee |
Expense per employee |
EBITDA % |
8 |
9 |
10 |
11 |
12 |
13 |
14
|
BSNL |
|
|
|
|
|
|
Air Tel |
|
|
|
|
|
|
R-Jio |
|
|
|
|
|
|
Voda-Idea |
|
|
|
|
|
|
10. It is really baffling that a scam-free BJP-led NDA government is going to waste so much public money by bestowing it on the irretrievably loss-making company. Government must reconsider the “package” gift in good time rescind the decision. (1,085 words)
END