From being a monopoly to being confronted with a decline in the public sector's share in telecom market during the past five years, Bharat Sanchar Nigam Limited (BSNL) is no longer a dormant giant. More so considering that Minister for Communications and Information Technology Dayanidhi Maran has issued the state-owned service provider a 10-point action plan to face competition.
In an interview with Business Standard BSNL Chairman and Managing Director A K Sinha gives his perspective on the company's expansion plans and the contentious access deficit charge (ADC) regime. Excerpts:
What steps is BSNL taking to maintain its market domination in wireline services? Have you worked out plans to meet the government's target of providing 250 million telephones by 2007?
Our focus is two-fold "" establish our footprints in all regions of India and make telephone-on-demand a reality. Our waiting list is about 1.7 million, of which 1.3 million are in rural areas.
We hope to wipe out the waiting list by March 2006. We are also going in for cables for up to 5 km and will be using wireless systems like corDECT and CDMA for far-flung areas.
At the same time, we are working on a Rs 150-crore project to connect 14,000 villages through satellite telephony since there is no other possibility of establishing communication links with them.
We also want to maintain our 50 per cent market share, for which we have drawn up plans that would see an annual capital expenditure of Rs 25,000 crore instead of the current Rs 11,000 to Rs 12,000 crore.
It will also mean that we need to borrow from the markets and procedures need to be changed to enable us to source equipment faster. We are in talks with the government on all these issues.
What are BSNL's plans for the urban markets?
We have started a massive modernisation drive to retain and increase our urban base. With modernisation, the fault rates and drop calls will witness a drastic reduction.
We are aiming at reducing the fault rate "" which is 8.9 "" and reduce it to between four or five over the next 12 to 18 months. We also plan to set up a pole-less network, especially in the big cities, to reduce network disturbance. It will also make these areas look better.
For smaller towns, we plan to set up more exchanges and reduce the cable lengths. These plans will be completed in three or four years as equipment needs to be procured and systems put in place.
What about the shortage of prepaid cards? BSNL is still a small player in the cellular segment.
Following capacity utilisation, the past nine months have been a dry patch. There is some waiting list in Bihar, Jharkhand and UP (east), which was partly due to complaints of black marketing.
We have ordered and received a part of the equipment we had ordered. Despite having only two mobile years as compared with our competitors, we have 21 per cent of the market share.
We will soon roll out 15 million new connections by January-end or February. Our focus is on increasing the pre-paid capacity as it accounts for a bulk of our subscriber base.
The government is not reimbursing your licence fees and has not met its commitment on paying its share of the pension liability....
The matter is with the government and we are in the discussion mode.
The much-awaited and talked about broadband services will finally be launched on January 14. Can you throw more light on your broadband project?
Our broadband services will be launched simultaneously from six different cities "" Chennai, Hyderabad, Bangalore, Kolkata, Delhi and Mumbai. The target is to have 1 million connections by December 2005, and 3 million by 2007.
We will provide broadband services in 198 cities spread across the 24 telecom circles by the end of March 2005. Under brand name "Data One", we will provide eight tariff plans "" four each under the Home Plan and Business Plan, with minimum charges ranging from Rs 500 to Rs 3,300, and Rs 1,200 to Rs 9,000, respectively, depending upon the bandwidth.
Are you worried about the content for broadband services?
It is true that we currently do not have the required content providers for broadband services. Discussions are on with several players to provide services like video-on-demand, video streaming and also for establishing video libraries.
It may take a while before we have sufficient content "" we are not worried about this, however. It is a trend the world over.
What is the status of the National Internet Backbone? When will that be completed?
The National Internet Backbone is nearing its completion. Following this, we will move a lot of our systems on this platform. Not just broadband, this backbone will also be used for local exchanges.
With it in place, we will introduce convergent billing amongst other facilities. This platform will see massive work over the next two years "" we want to take it to the SDCA level, where any bill can be printed and paid from across the country.
We will offer convergent billing services where customers can get a comprehensive bill for all BSNL services that they use across various centres in the country.
Orders for equipment have already been placed and we hope to have the service in place in the next one-and-a-half to two years.
Does the Telecom Regulatory Authority of India's (Trai's) recent announcement of slashing the access deficit charge (ADC) slow your expansion plans?
The ADC cut has forced us to reconsider economically-unviable projects. We have incurred an annual cost of over Rs 11,000 crore on our rural telephony and the ADC we get is only Rs 5,000 crore.
Nobody is talking about the Rs 6,000-crore loss that we have already. We do not agree with Trai's contention that the loss will be made up by increased volumes.
It can only happen if there is a 30 to 40 per cent increase in call minutes. But our projections show that the increase in call minutes will only be between 5 and 10 per cent.
Our calculations say that we stand to lose Rs 1,254 crore from the new regime with the loss from domestic long-distance calls is estimated at Rs 748 crore.
We stand to lose another Rs 300 crore on incoming international calls, and Rs 170 crore on outgoing international calls annually.
In such a scenario, what are the options before BSNL?
If we continue with socially-desirable projects under the new ADC regime, we may go in the red. Raising tariffs, increasing rentals and reducing the pulse rates are alternatives. We have approached the department of telecommunications with a detailed analysis of the impact.
Approaching the TDSAT (Telecom Dispute Settlement and Appellate Tribunal) is another option. We are yet to decide on the future course of action.
On the merger with MTNL, are you working with Morgan Stanley, the synergy advisor on the issue?
We have presented our case to the government and my officials will make a presentation to the advisors on the issue. My opinion is that both BSNL and MTNL should merge in national interest because there is plenty of synergy there.
