Articles
The BSNL Story
Dt: 18/11/25
The BSNL Story
Dr T.H.Chowdary*
The Department of Telecoms (DOT) of the Government of India (GOI) was the sole provider of many types of telecom services, telegram, telex and telephony till the year 2000. As the telecom and the postal services were in the same Department of P&T, the financial deficits in the postal services which are essentially of social service nature were covered by the surpluses in the telecom wing of the P&T. As the deficits of the postal services were increasing, the telegraph, telephone etc., charges were getting increased to cover the growing postal deficits. That was why there used to be long waiting lists for telephones, for several years. To end this situation, the telecoms were separated from the posts totally in 1984 and the newly designated Department of Telecoms ( DOT) was authorized to use its surpluses for investment for expansion. Even then as rates were increased the surpluses were not sufficient to expand the networks so that the waiting list and lime could be brought down. The telecoms were therefore corporatized in the year 2000 ( 2nd Oct ) as Bharat Sanchar Nigam Limited (BSNL). The international services were corporatized in 1986 as Videsh Sanchar Nigam Limited (VSNL). The BSNL and the VSNL were monopoly corporations of the government.
2. As a further consequence of economic liberalization of the Indian economy begun in 1991 in order to end starvation of telephone service and introduce the new services coming based upon wireless ( radio), private sector companies (P-Telcos) were gradually allowed first to provide new services like the cellular mobile telephony (CMTS) and every other type of service being
invented and provided all over the world. The P-Telcos were first allowed in the four major metro cities Mumbai, Chennai, Kolkata and Delhi two per city has gradually in accordance with the National Telecom Policies ( NTP’s of 1994 & 99) . Every type of telecom service available in the world was also allowed to be provided under license by private companies. First they were competing with the government’s department that is, DOT . In the year 2000 in order to create a level - playing field the DOT’s telecom services were constituted into the fully state-owned Bharat Sanchar Nigam Ltd ( BSNL) . In the year 1997 the Telecom Regulatory Authority of India (TRAI) was created to regulate the competition most importantly to facilitate interconnection of the different P-Telcos’ networks. In order to settle the disputes between the P-Telcos among themselves and with the government, the Telecom Disputes Settlement and Appellate Authority (TDSAT) was created in the year 2000.
3. In order to give the mobile telecommunications using radio frequencies government was allotting the radio spectrum to different companies periodically letting in more companies and providing more services.
4. When the liberalization started we had 10 mln all land based telephones for 100 cr people that is, the telephone density was 1 for 100 people. Today, we have over 120 cr (1.2 bln ) telephones for 1450 mln population. That is, about 83 telephones for 100 persons. In the world there are more telephones than people . Within India in several states - Delhi, Himachal Pradesh, Kerala, Karnataka, Telangana we have more telephones than the people themselves like in the world as a whole.
5. At one time during 2007-‘10 every month 10 competing Telcos were together giving more than 10 mln telephones per month. The prices started tumbling down since then there were mergers, acquisitions and demise. By now there remain Reliance -Jio, Bharati Airtel , Vodafone -Idea and BSNL /MTNL.
6. We will consider the fortunes of BSNL including MTNL the two government of India companies G- Telcos. In the field today Telcos are R -Jio ( since 2007), the Bharati Airtel ( since 1995), Vodafone Idea ( since 2018 of merger) and the BSNL since 2000 Oct.
7. The BSNL ( created in Oct 2000) had once 100% share of the landlines. Today that share is 8.0% entered into the mobile telephone service in the year 2002 . The highest share it had was 21% in the year 2005. Today it is less than 8%. The BSNL was making profits in the first 7 to 8 years. And since 2008 it has been continuously losing money and subscribers also. Its accumulated losses are about Rs. 60,000 cr . Government has pumped in more than Rs. 3,50,000 cr in the past few years into this company in the hope of rejuvenating its and enabling it to compete with the P- Telco —all unfortunately forlorn expectations. It is still making losses
8. Let us compare its performance :
Total Subscribers: 1220 mln
|
|
R-Jio |
Bharati Air Tel |
Vodafone-Idea |
BSNL |
|
mln |
499 |
410 |
213 |
92 |
|
% |
41 |
33.6 |
17.44 |
7.89 |
9. Active subscribers of P-Telcos are over 95% and BSNL’s are about 55% . Average Revenue Per User (ARPU) per month of RJio and Bharati Airtel are about Rs. 250 p.m , BSNL about Rs. 55 .
10. The number of employees of BSNL are about 57,000 earning per year per employee Rs. 9 lakhs, R-Jio has 93,000 employees for 499 mln subscribers earning per employee of R-Jio is Rs. 18,35,000 per year ; R-Jio has one employee for 5366 subscribers; BSNL has one employee for 1,614 subscribers.
11. While the R-Jio and Bharati Airtel have deployed 5G networks and are gaining subscribers, the BSNL is still struggling to install and extend its 4G network. G stands for - generation of technology . The first was in mid 1980s ; 2G was in 1995; 3G was in the year 2008 ; the 4G ( by P-Telcos) was in the year 2012 and 5G since 2024 by P Telcos. The BSNL is trying to install and extend the 4G network now in 2025 !
12. The MTNL ,the state majority owned Telco operating in Delhi and Mumbai has defaulted on the payment of interest for its debenture holders. It defaulted over Es. 8000 cr to Banks. It is heavily indebted and there is no way it could be made into a profitable company. While R-Jio and Bharati Airtel are making increasing profits quarter after quarter, the BSNL is still losing money. Of late it claimed that it is making some marginal profits.
13. There is one private company Vodafone - Idea which has been consistently making losses and loosing subscribers still part of the huge debt it owes to DOT/ Govt has been converted into equity of a little over 49%. The DOT still has claims against this company to the extent of over Rs. 70,000 cr. If it converts even part of it into equity, the Vodafone -Idea will also become a Public Sector Undertaking (PSU) like the BSNL and MTNL. The Vodafone-Idea has been continuously litigating in the Supreme Court disputing the DOT’s claims of various dues.
14. The Supreme Court seems to get vexed with the Vodafone-Idea perpetual litigation . It recently ruled that the government can take a decision to waive off or convert the debt into equity as before and put an end to this endless intense litigation.
15. The Minister for Communications seems to be monitoring the performance of the BSNL with the intention of making it into a loss-less company. In the latest review of the BSNL’s performances he disclosed the following figures;
· ARPU= Rs. 81 in Q1 and Rs. 91 in Q2 of 2025-26 ( compared to about Rs. 250 for R-Jio and Bharati Air Tel)
· Jharkhand , Kolkata ..…. the ARPU is less than Rs. 60
· Revenue per employee = Rs. 9 lakhs ( for about 57,000 employees) ( compared to Rs. 18.3 lakhs; 93,000 employees of R-Jio)
· Its subscribers are= about 92 mln compared to R-Jio 499 mln ; Bharti Airtel 410 mln)
16. Considering the performance record of BSNL, MTNL and Vodafone over the past decade it appears prudent to
a) DOT/ govt convert the debt owed by Vodafone-Idea into equity, thus converting it into a PSU
b) Merge BSNL, MTNL and Vodafone into one PSU, as a G-Telco ( Government Telco)
c) Nurture healthy competition between the two P-Telcos and one G-Telco ( comprising Vodafone-Idea, BSNL and MTNL)
17. This 3- Telco eco-system will save one the nation’s investment in Telecoms, yet ensure the most an d best and latest technology telecom and information services at world’s least expensive rates to all the population, all over Bharat.
18. The late Sri Vasant Sathe a senior Congress leader was once minister of telecoms too. His observation about PSUs is worth recalling:
Public sector Undertakings
Academicians have attributed several traditional strengths to the public sector .
They primarily are:
-ability to survive without profit
-state-ownership gives them immortality
-wages and high bonuses can be paid ever by continuously incurring losses
-government ownership gives full benefit of a monopoly
- Vasant Sathe, in the book
Restructuring of Public Sector in India
I may add that the Minister is also the Chief Purchase Officer of PSUs, for obvious reasons.
P.S: When JRD Tata once asked Indira Gandhi, “why her party was not seeking donations from industrialists, she was reported to have said, “we seek them from defense equipment contractors ” (like Bofors, HDW…)
END
(1,515 words)