BSNL, a public sector company and one of the largest telecom firms in India, is not profitable. So, now the government has reportedly asked to company to explore “all options” including closure. In other words, if everything fails — and chances are that this is BSNL we are talking about everything is likely to fail — the government may sell or close BSNL.
According to a TOI report, the government’s directives to BSNL came after the company’s top officials met with telecom secretary Aruna Sundararajan. BSNL’s chairman Anupam Shrivastava in the meeting reportedly talked about the company’s current financial status, its losses, how it was been affected by the entry of Jio, prospects of voluntary retirement scheme and early retirement plans for employees.
The government officials have asked BSNL to prepare a note on what would happen if its business is shut down. The other options that the government is looking for BSNL include strategic disinvestment of company and revival. BSNL has been asked to submit a comparative analysis of all these options.
BSNL which offers mobile, landline and broadband services in the country, had posted a loss of Rs 4,793 crore in 2016-17. While the company is yet to announce its financial results for 2017-18, it has been posting losses for the last three years. According to guidelines issued by Department of Public Enterprises, BSNL has been declared “Incipient Sick.” A public sector company is considered “Sick” by the government if it posts losses in any financial year equal to 50 per cent or more of its average net worth during four years immediately preceding such financial year.
BSNL has told the government that apart from the cut-throat competition in the market, it is also struggling with its large ageing population of employees. “If the age of superannuation is reduced from 2019-2020, there would be savings of approximately Rs 3,000 crore in the bill,” a company spokesperson later told TOI.
The problem for BSNL is that even though it has a large number of subscribers it has not been able to compete, for various reasons, with companies like Jio, Airtel and Vodafone. In the last couple of years it has failed to upgrade its network to 4G at a pace that could have allowed it to compete with Jio and Airtel. Similarly, it has also struggles to rollout its fiber broadband service. For a long time, BSNL got subscribers because of its reach, because it was available in areas where other telecom companies didn’t exist. But that is something Jio and Airtel in the last couple of years have been able to counter as they have improved their network availability.