The financial troubles of the government-owned telecom company Bharat Sanchar Nigam Limited (BSNL) were already well known, but its cup of woes now seems to have overflowed. A delay to the payment of February salaries to employees is the latest concern about the state-backed Indian telco.
Amid a media frenzy over the delayed salary payments, BSNL’s management, following the intervention of the country’s telecom minister, finally paid the overdue salaries after a fortnight’s delay. A promise to pay wages on time next month has not been enough to calm the nerves of employees, who have complained about what they see as government apathy regarding the operator.
Talks of a government move to shut down BSNL have served only to make employees more restless. Government thinktank Niti Aayog (formerly the planning commission) is thought to have pushed for a closure of BSNL. Even the government is understood to have asked BSNL’s managers to consider options including disinvestment, sell-off and closure.
BSNL has been bleeding for some time. In the last three years, it has accumulated losses of more than 176.5 billion Indian rupees ($2.56 billion), and in the 2017/18 fiscal year alone its loss hit INR 79.9 billion ($1.16 billion). BSNL’s annual revenues fell from INR324.1 billion ($4.7 billion) in the year ending March 2016 to INR250.7 billion ($3.6 billion) two years later.
The company has struggled to cope with the cut-throat competition that new entrant Reliance Jio has brought to India’s mobile market. Since March 2016, BSNL’s market share has remained flat at around 9.5%, while RJio has been able to capture a 24% share since arriving in the market in September 2016. At the end of last year, RJio had 280 million subscribers, against just 114 million at BSNL.
What has made matters worse for BSNL is that it cannot provide 4G services because the government has not assigned it any 4G spectrum. Employee associations have taken the unusual step of lobbying government authorities to allocate 4G spectrum so that BSNL can attract new customers. Their concern is that 2G and 3G services are fast becoming obsolete in a data-crazy country like India, and that BSNL could be in danger without a 4G offering.
Even as the losses keep mounting, and BSNL’s revenues continue to fall, employee costs have remained at roughly INR150 billion ($1.9 billion) annually for the last few years, representing BSNL’s largest cost item. At the end of March 2018, the operator had more than 186,000 employees.
India’s government is now looking to give a voluntary retirement option to employees in the 56 to 60 years age group. Managers may also seek to reduce the retirement age from 60 to 58.
While these piecemeal efforts may help to check RJio’s slide into the financial abyss, they are unlikely to revive it. Even BSNL admits as much in its 2017/18 annual report: “There has been an overall revenue decline of 15% to 20% across the board in the telecom sector. The sector is witnessing the new trend of fixed charging mechanism for all sort of services; and, owing to this and the highly price competitive market, the situation of revenue earning is likely to remain the same in the coming financial year also.”―Light Reading