Reviving BSNL in a competitive telecom market

Revival of BSNL in the competitive telecom market

Will the infusion of fresh capital in Bharat Sanchar Nigam Limited be enough to lift its sagging fortunes?

Story so far: To boost Bharat Sanchar Nigam Limited’s (BSNL) overall competitiveness in the steep domestic telecom market and reduce pressure on its balance sheet, the Union Cabinet on Wednesday approved another ₹1.64 crore stimulus package. The second reform package after 2019 is to be used over the next four years. The revival package would initiate measures on three fronts, namely providing fresh capital to modernize the state-owned operator’s services, strengthen its strained balance sheet and expand its optical network through the merger of Bharat Broadband Nigam Limited (BBNL) and BSNL. It is expected that the package could help the turnaround in such a way that BSNL will start earning in FY2026-27.

How does the latest package propose to help?

The package has three broad components. Starting with its efforts to expand its services, BSNL would administratively allocate spectrum in the 900/1800 MHz band at a cost of ₹ 44,993 crore through capital infusion. Spectrum can be defined as the invisible radio frequencies on which wireless signals are propagated, facilitating phone calls and internet use. Simply put, the allocation would help BSNL increase as well as consolidate its usable bandwidth. It would therefore be able to provide high-speed data using a more extensive network, more importantly, in rural areas. Apart from spectrum, the government would provide the company with ₹13,789 crore to fund its operational viability gap in commercially non-viable rural cable operations it undertook between 2014-15 and 2019-20 to further its social objectives.

How was the 2019 package?

Among the more important elements of the package was the proposed merger of Mahanagar Telecom Nigam Ltd (MTNL) and BSNL. It was argued that since BSNL appeals to the population in rural areas and MTNL is based in the metros of Mumbai and Delhi, combining their synergies would help gain a pan-India footprint. In April this year, it was reported that the merger was delayed due to financial reasons, including MTNL’s high debt.

The government has announced a capital infusion of ₹20,140 crore to acquire spectrum to help fuel operations. The overall package, which was for MTNL and BSNL together, paved the way for the two PSUs to raise long-term bonds for which the Center provided a sovereign guarantee.

How does BSNL compare to its peers?

The basic metric for evaluating the health of telecommunications service providers is ARPU, i.e. average revenue per user. BSNL’s social sector obligations require that all losses on capital assets be met only from internal accruals. Therefore, it is not able to respond promptly to technological innovations in the market like its private counterparts, say the rapid transition from 4G to 5G. Its ARPU thus suffers and affects the service offering. On the other hand, Bharti Airtel’s ARPU grew by 23% in the last quarter of March, while Reliance Jio’s ARPU grew by 27% year-on-year.

A survey of monthly subscriber data by the Telecom Authority of India (TRAI) between late April and May shows that BSNL lost wireless subscribers by an average of 0.30% each month during the period, while Bharti Airtel and Reliance Jio combined gained wireless subscribers. an average of 0.43% each month.

There is also a difference in the number of base transceiver stations (BTS) held by the three companies. A BTS is a device that transmits and receives radio signals from mobile devices and routes them to other terminals in the network. According to data presented in the Rajya Sabha in February, Reliance Jio and Bharti Airtel held six and five-and-a-half times more BTS compared to BSNL.

What makes this industry so competitive? Is there an untapped opportunity?

According to the National Investment Promotion and Facilitation Agency, India’s telecommunications industry is the second largest in the world. The total tele-density in the country is 84.88%. However, there is a gap between rural and urban areas. While the tele-density of the urban market is 134.70%, the rural market is largely untapped at around 58.2%. However, at the end of May, both Reliance Jio and Bharti Airtel had almost five times more subscribers in rural areas compared to BSNL.

ESSENCE

The government will provide ₹ 13,789 crore to BSNL to fund its operational viability gap in commercially non-viable rural cable operations carried out in 2014-15 and 2019-20.

A survey of monthly subscriber data by the Telecom Regulatory Authority of India (TRAI) between late April and May shows that BSNL lost wireless subscribers by an average of 0.30% each month during the period.

Reliance Jio and Airtel held six and five and a half times more BTS compared to BSNL.

Sanjit
Sanjit

I am Sanjit Gupta. I have completed my BMS then MMS both in marketing. I even did a diploma in computer software and Digital Marketing.

Articles: 4239

Leave a Reply

Your email address will not be published.

%d bloggers like this: