Memoranda for Submission to the Chief Ministers of the Two Telugu States.

Articles

BSNL Morphing into a Social Service Corporation

Dt:  23/12/24

BSNL Morphing into a Social Service Corporation

Dr T.H.Chowdary*

The telecom services provided by the Department of Telecoms (DOT) were corporatized effective from October 2000 as Bharat Sanchar Nigam Ltd (BSNL).  In 1986, the telephone services in Delhi and  Mumbai were together corporatized as Mahanagar Telephone Nigam Ltd (MTNL).  India’s international telecoms, were provided by the Overseas Communications Services (OCS), a separate entity within the DOT. This was also corporatized under the name, Videsh Sanchar Nigam Ltd (VSNL) in 1986.  The VSNL was privatized in 2002 sold to the Tatas .  It is known as Tata Communications. While BSNL is wholly owned by the  Government of India (GOI), MTNL’s 43.75% equity shares are held by the public and  56.25% by the GOI.

2. The idea of corporatizing the  government’s telecom services was to raise the money needed from the  capital markets to expand and modernise the  telecom services which were characterized by large waiting lists for long periods upto ten years in major cities, with periodically raised deposits to stay “alive” as an applicant. 

3. From the early 1990s , the telecom services sector was thrown open to private sector companies, first to provide new services like mobile radio, (cell phones), radio paging  , video conference, internet, satellite audio and video broadcasting . Private telecom companies (P-Telcos) mush-roomed during the Congress-led UPA government ( 2004-14). The telecom  famine ( apply, apply…..no reply, no supply)  disappeared; new technologies, new services are now aplenty at the   cheapest rates in the  world .  Competition led to the disappearance of all but three of the more 

than a dozen P-Telcos by the process of mergers, acquisition and insolvency.  We have the  Telecom Regulatory Authority of Inda  (TRAI) since 1997 to guide and oversea the competitive emergence and  co-existence of Telcos and the  Telecom Disputes  Settlement  Tribunal (TDSAT)  since 2000 to concern with contentious issues  among Telcos and government.

4.  With this happy infrastructure in place we now have the world’s second largest telecom,  network, offering every variety of telecom and information services, available anywhere in the  world, at the lowest rates, with the  average annual spend per telephone  as a small fraction  of the per capita income (PCI)  ( see table). 

Revenue per telephone per year / PCI

The affordability of telephone service in relation to Per Capita Income

 has increased  by 208 times !

5. We have 1200 mln telephones  which work out to  86 phones per 100 people.  In urban areas there are 134  telephones  for 100 people and in rural areas   58 per 100 people.  In some states there are  more phones than people   -  Delhi 273 phones per 100 people; Kerala -120; states with more than 100% - Tamilnadu, Karnataka, Maharashtra and Himachal Pradesh  while Bihar and  UP  have the lowest telephone density of 56 and 65 phones  per 100 people respectively.

Market Share in terms of subscribers as of March 31, 2024

While Reliance- Jio and  Bharati are  entirely private, Vodafone share-holding is partly private and  partly GOI’s DOT.

DOT converted the debt vowed by  the Vodafone into equity !  The government is losing money from three companies BSNL, MTNL and Vodafone.

Reliance-Jio and Bharati have been making increasing profits every year. R-Jio is debt-free and Bharti is pre-paying off  what it owes to government for purchase of radio spectrum from auctions.

6. Now something remarkable is happening.

·         The Vodafone, like BSNL has been losing customers to BSNL;  it has a huge debt of about Rs. 300,000 cr  its share of market is coming down; it is losing money quarter after quarter; yet it is able to raise additional equity !

·         R-Jio, Bharati and Vodafone raised  tariffs by about 25% a few months ago; their average  revenue per month (ARPU) rose to between Rs. 200  and Rs. 240  from about Rs. 180 they are losing millions of low paying customers to BSNL, every month .

·         BSNL is gaining low paying subscribers from all the  P-Telcos.

·         While R-Jio & Bharati have 93.1% and 99.25% and Vodafone  - 87.55% active subscribers; BSNL’s are about 51.75%

·         BSNL’s ARPU is about Rs. 150; it is still losing money; but it is being infused funds  periodically by the  GOI to “revive” it.  The BSNL is not raising tariffs; hence gaining low paying customers, from R-Jio, Bharati and even Vodafone.

·         BSNL’s accumulated losses are over Rs. 63,000 cr.

7. Thus BSNL  is the poor  man’s telephone company . It provides  telephone service to the  poor; just as Government of India  provides rations free to 800 million poor GOI periodically ; infuses funds into BSNL;  about Rs. 3,00,000 cr to keep it going; to “revive” it. Its operations and management are all by government officers .

8. Prime Minister Narendra Modi is passionate about “Sab ke saath sabka vikas”.  The welfare must be for the poorest of the  poor, the BPL, below poverty level people.  They should benefit by the  digital  revolution .  Therefore each BPL person  should be given a smart phone and skilled  to use it.   The BSNL should be tasked with this service .  A portion of the Corporate  Social  Responsibility (CSR) funds of every I.T and  telecom  company, augmented by a portion of the Universal Service Fund (USF) to which Telcos contribute, should be funneled to the  BSNL to discharge this social service of  Digitalization for the  BPL Indians. BSNL will be freed of the  odium of a money  guzzler , a loss-making PSU. 

9. BSNL may create a NOT- FOR- PROFIT subsidiary company and appoint  spirited, real business management professionals into this  social  service company.  New social objectives require spirited, dedicated, not deputationists, mill of the run government officials on deputation.  (882 words)

END