Revival package for BSNL: Much needed bailout

Source: This post is based on the following articles

“Much needed bailout – BSNL needs state help to fulfil its social role in rural areas and in disaster relief” published in The Hindu on 29th July 2022.

“A late call for BSNL” published in the Business Standard on 29th July 2022.

Syllabus: GS 3 – Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Relevance: About the revival package for BSNL.

News: The government recently announced a Rs 1.64-trillion lifeline for the ailing Bharat Sanchar Nigam Ltd (BSNL). The revival programme reveals how far the state-owned telecom service provider lags behind the technology curve. This is the second revival package for BSNL in three years. The government infused Rs 69,000 crore in 2019.

What is the revival package for BSNL?

What are the concerns against the revival package for BSNL?

This revival plan raises the question of whether the government is throwing the money the government earn from the 5G auctions to private telecom operators. This is because the BSNL’s problems are fundamental. Such as

1) BSNL subscriber base has scarcely grown even though the utility was given preferential spectrum allotments. 2) Its share in wireless and broadband is a negligible 9.7 and 2.9% respectively. However, its rural wireless subscribers shrank by just 11.4 lakh, 3) BSNL’s inability to compete: In 2021, BSNL surrendered unutilised 2G spectrum in the 900 and 1800 MHz bands, though this is where most telecom operators have large numbers of subscribers, 4) BSNL will not make a profit if its focus is on rural India alone.

The government’s objective of improving rural connectivity cannot be feasible through viability gap funding. Achieving a socio-economic purpose via a commercial corporation has never worked in the past and BSNL is unlikely to be a game-changer in this respect.

Why does the revival package for BSNL essential?

1) The government already extended concessions to privately-owned Vodafone India and Bharti Airtel over AGR due. The package is nothing but the government’s helping hand for its own utility is valid.

2) The revival plan is expected to see BSNL turn around and make profits. This is feasible as the BSNL’s losses in 2020-21 narrowed down and the utility turned profitable at the operating level.

From an employee base that exceeded 1.65 lakh, and consumed about 75% of its total income, the BSNL had carved the number of regular employees to around 64000 in 2021, with the proportion of employee benefit expenses to total income more than halving to 36%. This is done by halving the salary bill via a voluntary retirement scheme and reduction of high-cost debt.

All this will make BSNL better placed and competitive in the technologically rapidly evolving marketplace

3) Any further delay in adequately funding the BSNL in the “strategic sector” risks compromising the goals of bridging the digital divide and ensuring the evolution of an inclusive knowledge society.

Hence, the revival package for BSNL will play a “crucial role in the expansion of telecom services in rural areas, development of indigenous technology and disaster relief.”