Loss-making, state-owned firm Bharat Sanchar Nigam (BSNL) has requested the department of telecommunications for allocation of an additional carrier (5 MHz) spectrum in the 2100 MHz band across 19 circles so that it can provide 4G services to shore up its revenues. To boost its case, since it does not want to pay Rs 12,955 crore which is the price of the spectrum as per the latest auction determined price, BSNL has said if it is enabled to provide 4G services, it will lead to faster penetration of such services in rural areas and give a leg-up to the government’s Digital India initiative.
While the DoT is yet to respond to BSNL’s proposal, subscriber figures collated by the Telecom Regulatory Authority of India (Trai) show that BSNL lags far behind its private sector peer when it comes to rural subscriber base. Not only has BSNL lower rural subscriber market share compared to operators like Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio, its own user base has also a lower rural share. For instance, only 32% of the total 112 million users of BSNL are rural subscribers. Compare this to the private sector players — Bharti’s rural subscribers comprise 52% of its total base of 304 million, Vodafone’s rural share is 54% of its total 223 user base, Idea’s rural share is also at 54% of its total 211 million subscribers.
As a result, BSNL’s market share of rural subscribers at 7% is way lower than that of Bharti’s 30%, Vodafone’s 23%, and Idea’s 22%. Interestingly, BSNL’s market share is even lower than that of the new entrant Reliance Jio, which has a market share of 10%. BSNL chairman and managing director Anupam Shrivastava confirmed to FE that the the company has sent a proposal to the DoT for allocation of spectrum in the 2100 MHz band.
On how the operator intends to pay for it, he said that BSNL will pay half the amount by issuing additional shares to the government and the remaining via revenue generated from the business in equal annual installments. But, DoT officials are not convinced about the proposal. The fact is that BSNL has been making losses for more than 5-6 years now. Earlier its revenue was increasing in low single digits on a yearly basis, however, in FY17, it registered a 3% decline in revenues. BSNL’s revenues in FY17 declined to Rs 31,533 crore against Rs 32,411 crore in the previous year. Its net loss marginally narrowed to Rs 4,793 crore against Rs 4,859 crore in the previous fiscal.
Around 55% of its revenue goes into its wage bill which increases by about 8% every year. The company was given 3G spectrum two years ahead of private operators but it could not make the first mover advantage. In fact, the broadband wireless access spectrum in 2.5 GHz which was also given to it two years ahead of private operators could not be effectively used by it and it later surrendered this spectrum in six circles and got a refund of Rs 6,724.51 crore from the government. Though there’s no provision for refund in case of surrendering of the spectrum, the government allowed it in the case of BSNL since it was a public sector undertaking and not doing well financially. – Financial Express