To invite expressions of interest by month-end.
Reeling under a financial crisis, state-owned Bharat Sanchar Nigam Ltd (BSNL) plans to outsource its third generation (3G) mobile services.
The company is working on details for a franchisee agreement and would invite expressions of interest (EoIs) by the end of this month, Chairman and Managing Director Kuldeep Goyal told Business Standard.
BSNL, along with the other state-run telecom firm, MTNL, had got 3G spectrum much ahead of private companies, as the government wanted to give the two public sector companies the first-mover advantage. MTNL offers services in Delhi and Mumbai and BSNL in the rest of the country.
Outsourcing would help BSNL cut the investment it needs to make to roll out 3G services. The company wants to garner a substantial market share in 3G before the first quarter of next year, when more aggressive private players are expected to offer similar services.
“We expect 5 per cent of our total user base to come from 3G. This figure might go up to 10-15 per cent of our mobile customer base in the coming time,” Goyal said. Currently, 3G subscribers form a minuscule part of its total user base of over 60 million.
The franchisee could be an existing mobile service provider or a company which had not won or bid for 3G spectrum, and would manage customer acquisition, marketing and sales of 3G services across the country, he said.
Loss this year
BSNL has been losing market share to private companies in the competitive Indian mobile market. Once the No 2 telecom player, it is now struggling to maintain its fourth position in the mobile space.
The company is also under financial strain, as it has paid out Rs 3,700 crore in pay arrears, and may end 2009-10 (it is yet to declare results for the year) with losses. “At the end of December 2009, we had a net profit of Rs 175 crore, and we were expecting it to be Rs 200-300 crore by the end of the financial year. However, we have made a payout of arrears on wages, which is around Rs 3,700 crore. Surely, we will make a loss this year,” Goyal said.
Earlier, BSNL’s plan to purchase network equipment had run into trouble. The company had invited bids nearly two years earlier for adding 93 million GSM lines at an estimated investment of about Rs 36,000 crore, but it could not place the orders due to various permission hold-ups, among other things. The tender was recently scrapped.
Industry experts say BSNL has so far failed to make much of its first-mover advantage in the 3G space. The firm has launched its 3G mobile services in 450 cities and plans to take it to 750 cities by the end of this year, with a target of four million subscribers. It is also working on various value-added services (VAS) such as mobile banking and movie downloads at a higher speed for its 3G subscribers. MTNL has about 400,000 3G subscribers.
BSNL also plans to double its broadband subscriber base from 3.5 million to 7.5 million by the end of this financial year. It has 12 per cent market share in the mobile market in terms of subscribers and is fourth in the pecking order. But in the broadband space, it’s the undisputed leader, with 60 per cent of the market.
Bharti Airtel, Vodafone Essar, Reliance Communications, Idea Cellular and Aircel are among the private mobile companies that have won 3G spectrum through the auction process. The entry of new ones will add to the competition in 3G. In the 2G space, there are 14 operators competing on rates with each other to gain subscribers.
