BSNL Needs To Increase Its Customer Base Or Cut Staff

Government-backed telecom companies — Mahanagar Telephone Nigam (MTNL) and Bharat Sanchar Nigam (BSNL) — will have to attract more customers towards their services or cut staff to address the growing financial crisis at the companies. BSNL failed to pay the salaries of its 1.76 lakh employees in February due to lack of funds. A similar situation has arisen at MTNL.

According to a media report, BSNL only has 650 customers per employee, as against only 160 for MTNL. The former also has the highest number of employees among all the telecom operators in India.

Private players lead in this respect. Vodafone Idea has 27,916 customers per employee and a 418.74 million customer base as of December 31, 2018. It has only 12,000 people on its payroll. Bharti Airtel has a customer base of 340.25 million, managed by 16,962 staff members. Customers per employee are close to 20,000.

BSNL uses 60 percent of its revenue in paying employee salaries. This is much higher for MTNL, which mainly operates in Mumbai and Delhi.

A recent report by Kotak Institutional Equities said that in the past 14 years, BSNL has moved from ‘navratna’ to an ‘incipient sick’ public sector unit. “FY08 was the last year of positive operating profit (EBIT) for BSNL. Since then, the company has posted a cumulative FY09-18 EBIT loss of Rs 82,000 crore. This figure would have crossed Rs 90,000 crore by December 31, 2018,” it said.

It added that employee expenses, including retiral benefit accruals, were 66 percent of operating revenue in FY18 as compared with 21 percent in FY06. With the intense competition in the telecom sector, BSNL has suffered a severe loss of jobs and market share over the past few years.―Money Control