The
state-owned telecom firm BSNL has landed in a difficult situation, with
things turning topsy-turvy for them. The entry of Reliance Jio
continues to have an effect on the telecom industry with the sector in
the doldrums and has caused BSNL to enter in troubled waters.
BSNL is going through a tough time, so much so that it has for the first time delayed salary payment of its employees. The state-operated telecom firm has over 1.76 lakh employees and with employee cost running into 55-60% of expenditure, along with factors such as heightened competition and lower tariffs, has brought down the telecom PSU.
Incorporated in 2000 out of the department of telecommunications, Bharat Sanchar Nigam Ltd (BSNL), once a number two mobile player, last year recorded a loss of Rs 8,000 crore. The telecom PSU's financial position has been deteriorating for a long time. In the past 14 years, it has moved from Navratna status to being declared as an 'Incipient Sick' PSU.
Once a Navratna, BSNL has become a "sick PSU".
Decoding BSNL's downfall from a Navratna to 'sick PSU':
(With inputs from Mansi Taneja)
BSNL is going through a tough time, so much so that it has for the first time delayed salary payment of its employees. The state-operated telecom firm has over 1.76 lakh employees and with employee cost running into 55-60% of expenditure, along with factors such as heightened competition and lower tariffs, has brought down the telecom PSU.
Incorporated in 2000 out of the department of telecommunications, Bharat Sanchar Nigam Ltd (BSNL), once a number two mobile player, last year recorded a loss of Rs 8,000 crore. The telecom PSU's financial position has been deteriorating for a long time. In the past 14 years, it has moved from Navratna status to being declared as an 'Incipient Sick' PSU.
Once a Navratna, BSNL has become a "sick PSU".
Decoding BSNL's downfall from a Navratna to 'sick PSU':
(With inputs from Mansi Taneja)
1. BSNL employees going through a tough time
1/9
BSNL is going through a tough time and so are its employees.
Several employees are yet to receive their February salary. This is
for the first time in 18 years that the firm has failed to pay salaries
to its staff.
The employees were supposed to get their salary on February 28. The
situation for contractual employees in some circles is even worse as
they reportedly haven’t received their salaries for the last three
months, and while others haven’t received a penny since the last six
months
2. Heightened competition and lower tariffs
2/9
The high employee cost running into 55-60% of expenditure, along with factors such as heightened competition and lower tariffs, has brought down the telecom PSU
3. BSNL recorded a loss of Rs 8,000 crore last year
3/9
Incorporated in 2000 out of the department of
telecommunications, Bharat Sanchar Nigam Ltd (BSNL), once a number two
mobile player, is now an ailing unit with a mammoth 1.76 lakh employees.
From a profit of Rs 10,000 crore around 2005, it recorded a loss of Rs 8,000 crore last year
4. Imminent reasons of downfall
4/9
According to experts, the imminent downfall of the PSU
started around 2007-2008 when the company failed to add network capacity
due to various delays in tenders. Also, government interference, even
at micro levels, made the decision making prolonged and different.
Many earlier proposals of a stake sale were met with stiff opposition
from BSNL unions, which also were a major hurdle towards the
privatisation of the company.
A voluntary retirement scheme (VRS) has been in the works since 2011, but a final decision is yet to be made
5. BSNL's inability to withstand sector stress
5/9
BSNL's inability to withstand the sector stress with its
uncompetitive cost structure and an inferior network have hurt its
financials over the years, according to analysts.
The telecom PSU's financial position has been deteriorating for a
long time. In the past 14 years, it has moved from Navratna status to
being declared as an 'Incipient Sick' PSU
6. FY 2008 was the last year of positive operating profit for BSNL
6/9
The financial year 2008 was the last year of positive
operating profit for BSNL. Since then, the company has posted a
cumulative -- FY2009-18, EBIT loss of Rs 82,000 crore, and would have
crossed Rs 90,000 crore by end of December 2018, according to a note by
Kotak Institutional Equities.
Employee expenses, including retirement benefit accruals, stood at
66% of operating revenues in FY2018 versus 21% in FY2006 and 27% in
FY2008
7. Huge employee base a big liability
7/9
The huge employee base is a big liability. Compared to
Airtel, which has around 21,000 employees and Vodafone Idea's estimated
20,000, BSNL numbers stand like a skyscraper at 1.76 lakh.
Many jobs have become redundant with the change in technologies,
though some employees have been reskilled and transferred to manage
different tasks
8. Proactive steps being taken by BSNL
8/9
BSNL has been taking proactive steps to generate
additional revenue streams mainly from the enterprise segment, WiFi,
spectrum and tower sharing and launch of its fiber to home services.
In a bid to retain users, it has matched Reliance Jio's tariffs. It
is also exploring new avenues like IoT and smart cities and looking to
monetise its building assets
9. The revival package
9/9
