After A Raja’s exit as communications minister, efforts have started to revive state-run telecom company Bharat Sanchar Nigam Ltd (BSNL), which has been losing its position over the years.
The Board for Reconstruction of Public Sector Enterprises (BRPSE) has decided suo motu to formulate a revival plan for the loss-making telecom company. It has asked top officials of BSNL for a meeting next week to discuss the problems faced by the company.
BSNL, which employs about 300,000 employees across the country, had incurred a loss of Rs 1,823 crore in the financial year 2009-10, the first time since its inception 10 years ago.
Falling revenues in landline services and a higher wage bill are seen as the two major reasons behind the telecom firm’s losses.
BSNL had recorded a profit of Rs 575 crore in 2008-09.
The company had been losing its market share and subscribers in the mobile phone market consistently over the last few years.
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BSNL also recorded a 10.4 per cent decline in its revenues at Rs 32,045.41 crore for 2009-10 against Rs 35,812 crore a year ago.
According to BRPSE chief Nitish Sengupta, “It seems the company has a lot of problems and is not being able to compete with private players in a fast expanding market. It lacks consumer susceptibility and has an excessive workforce. We will discuss all these issues before making a blueprint for its revival.” Sources in BRPSE claimed that during his tenure, Raja was not keen to apply the BRPSE prescription for BSNL.
Earlier, BRPSE had recommended that the ailing Indian Telephone Industries (ITI) be taken over by BSNL as the former is well known for manufacturing equipment for the telecom industry. “But we faced stiff resistance from the then minister, A Raja, who refused to accept our suggestions,” Sengupta told Business Standard.
ITI has a plant in Raebareli, the Lok Sabha constituency of Congress President Sonia Gandhi.
Gandhi was also keen to see ITI become a BSNL subsidiary but Raja didn’t allow it in his tenure.
BRPSE, however, will not take up the merger issue in its forthcoming meeting as it wants to focus only on the financial health of BSNL.
Apart from wage revision, which alone caused an additional expenditure of Rs 2,900 crore for BSNL in 2009-10, drastic reduction in tariff with tough competition also hit the growth of the company.
A committee headed by Sam Pitroda, the prime minister’s advisor on public information, infrastructure and innovation, had earlier suggested that state-run telecom company should give retirement or transfer about 100,000 of its employees through best possible measures such as voluntary retirement scheme.
Apart from the BSNL, the BRPSE is also keen to take up the case of ITDC and the state-owned fertilizer companies.