Have you heard of the famous economic advice, while investing – Don’t throw good money after bad? It prevents from incurring further losses in the wild and hopeless attempt to recover previous losses. This economic advice aptly fits on several Public Sector Enterprises.
They have besmirched ‘Sarkari’ attitude and made it notorious as ‘incompetence’ and ‘inaction’. Even after repeated attempts to revive the sinking ship of these ailing PSUs, the result is before everyone. The fiscal condition of these PSUs is still in doldrums and there is no hope of immediate change of fortune of these economically liable PSUs.
BSNL-MTNL perishing from the wireless communication sphere
The telecom sector can be broadly categorised as wireless or fixed/landline communications. In the wireless subscription model, private telecom players have pushed the state-owned telecom players to the peril. As per August data, the private telecom service providers had 90.17 percent of wireless subscribers.
While the market shares of state-owned telecom players BSNL and MTNL stood at a dismal 9.83 percent, Jio has been maintaining a lead in this wireless telecom model. And BSNL-MTNL has been facing himalayan challenges to remain relevant in the sector.
Currently, the state-owned operator, BSNL-MTNL has only 3G services for its users, while the private players will very soon aggressively push to capture the market for 5G services. As per reports, BSNL is planning to launch its 4G services from the first week of January. It also plans to launch 5G services by the end of August next year.
Also read: “Quit your Sarkari Attitude or Pack Up” Ashwini Vaishnaw’s blunt warning to BSNL
BSNL lost its last frontier
But the telecom sector was in for a major surprise when the state-owned operators, BSNL and MTNL, lost their last frontier for the first time in telecom history. Since its establishment in 2000, BSNL has been dominating the landline service model.
But in the month of August, Jio overtook BSNL to became the largest landline service provider in the country. It is for the first time that a private telecom player has dethroned a state-owned operator in the landline telecom sphere.
As per TRAI data, Reliance-Jio added 7.35 million landline connections in August. Within the same time frame BSNL, which had been the market leader, added 7.13 million connections. With this, in just three years, Jio Fibre launched in 2019 has displaced the 22-year dominance of BSNL. Jio fibre offers both landline and fibre-based broadband services.
Further, market trends have been painting a grim picture for the state-owned operator BSNL-MTNL. This sector of fixed or landline telecommunication was the only area where BSNL had been enjoying a greater market share but in the last decade it has been fast shrinking. The number of landline connections has sharply declined in the last decade from 36.76 million in 2010 to 20.58 million in 2020.
Also read: BSNL and MTNL are going to go the Air India Way
As per official data, there are around 1.17 billion telecom connections in the country. But out of this less than 2% are landline or fixed connections. Losing its dominance and market share in this sphere will further strain the ailing revenue and financial condition of BSNL-MTNL. As per August data, they both held a market share of 37.4 in the landline sphere.
Additionally, BSNL and MTNL lost 571,778 customers and 470 wireless customers, respectively. The total subscriber of BSNL now stands at 110.06 million across the country.
Furthermore, routine TRAI test reports are denting for the state-owned BSNL. As per TRAI data, BSNL has the worst call drop rate in 14 out of 18 cities surveyed by the telecom regulator.
Also read: Air India is done. BSNL should be next!
BSNL incurring losses since 2009
FY 2009-10 was the first time when BSNL started incurring losses. That year had marked the entrance of private players that shook the telecom sector completely. Since 2009, BSNL has not entered into the profitable territory. In FY 2019-20, its loss stood at Rs 15,500 crores.
The government has been making desperate efforts to save it from bankruptcy. As per Budgetary provision, the Union government infused around Rs 44,720 crore into BSNL. The provision is made for capital infusion for the 4G spectrum, technology up-gradation and restructuring in the telecom PSU.
Earlier, to strengthen the state-owned telecom corporations, the government had approved a revival plan for BSNL and MTNL in 2019. All these developments indicate that there is no immediate revival of BSNL or it becoming a profitable organisation.
Additionally, it has been seen that post privatisation, several state-owned enterprises have been able to not just sustain themselves but have turned the tide to become a profitable venture. It is time that the government understands the market trend and take the hard pill and let BSNL be run effectively without the constraints of a state-owned enterprise.
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