Expressing grave concern about the deteriorating financial situation and abysmal state of affairs of Bharat Sanchar Nigam Limited, Rajeev Chandrasekhar, independent Member of Parliament and member of the Standing Committee on Finance, appealed to Prime Minister Manmohan Singh to intervene immediately to save the Navratna public sector unit from collapsing.
In a letter to the prime minister, Chandrasekhar said there is an urgent need to arrest the downward spiral in BSNL's valuation, and urged for a board revamp for speedy turnaround in profitability.
"For the past two years, BSNL has seen sharp erosion in profits and posted huge operational losses. BSNL's falling revenues, falling profits and falling market share are baffling since telecom companies of this size have been posting robust performances worldwide, not just in India," Chandrasekhar emphasised.
While many private telecom companies have seen significant revenue and profit jumps, BSNL has lost market share and grown much below the industry average in the mobile segment.
From a profit of Rs 4,231 crores (Rs 42.31 billion) in 2005-06, BSNL reportedly incurred losses of Rs 4,086 crores (Rs 40.86 billion) in 2008-09, rued Chandrasekhar.
Given this sad state of affairs, in the near future BSNL could end up being declared a 'sick' company.
Although comparisons with Air-India seem appropriate, Chandrasekhar pointed out that Air-India operates within an industry that is in the throes of a vicious downturn. But BSNL operates in the dynamic telecom sector with high growth rates. BSNL's problems have more to do with management and interference from the Department of Telecommunications.
These problems partly stem from BSNL's inability to respond promptly on capital expenditure and purchase issues and without interference from the telecom ministry. This affects network rollout and expansion plans-- critical in retaining customers and winning new ones in an ultra-competitive market.
"The government must act before it is too late and implement turnaround measures like those being undertaken at Air-India, including revamping the management and boards," urged Chandrasekhar. A professional chief operating officer must be appointed via a national/international search. The BSNL board must also be revamped with industry experts and empowered to decide speedily on all purchase and procurement issues.
Worldwide, many government-owned telecom companies have emerged as competitive, profitable entities, including British Telecom, Singapore Telecom, Telecom Malaysia, Telecom Norway, etc. "There is no reason why India- a technology powerhouse- cannot do the same. This is especially important since disinvestment has paid rich dividends in the past in augmenting the treasury. But BSNL must first be restored to its previous position and profitability if the Government of India and its citizens are to benefit," concluded Chandrasekhar.
