Challenges to BSNL revival: Despite the government’s best efforts to revive the loss-making telecom giant, Bharat Sanchar Nigam Ltd remains stuck in a downward spiral. Even massive capital infusion plans have failed to lift the public sector unit which suffers from systemic inefficiencies and the near-duopoly of Jio and Airtel in India’s telecom market. While major private players have already rolled out 5G services, BSNL is still in the process of completing its 4G deployment at 100,000 sites before transitioning to 5G.
BSNL was once a dominant force in the telecom sector during the 2000s, enjoying a near-monopoly. However, the entry of private players drastically changed the industry. Over the past decade, the PSU has struggled to compete with its agile and technologically advanced private competitors. BSNL lagged in adopting new technologies, and aggressive marketing strategies by private firms further eroded its market share, especially in the lucrative urban and mobile segments.
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BSNL struggling to stay relevant
While its competitors aggressively expanded their 4G networks, BSNL remained stuck in the 2G era, leading to a significant decline in broadband and fixed-line revenues. Although the government intervened by providing BSNL with a 4G spectrum license at no cost, the company failed to roll out services at the necessary pace.
The government remains deeply invested in BSNL due to its crucial role in rural connectivity. As the only state-run telecom provider, BSNL ensures communication services in remote regions and supports various government-run facilities. Additionally, it serves as a strategic backup in case private telecom companies fail. BSNL also plays a critical role in national security, making its survival a priority for the government.
To support BSNL revival, the government has announced multiple revival packages, totalling Rs 3.2 lakh crore, aimed at overcoming operational challenges. These efforts have yielded some positive results — BSNL reported a profit of Rs 262 crore in the October-December quarter, marking its first profit since 2007. In contrast, the company reported a loss of Rs 1,569 crore in the same quarter the previous year and Rs 1,243 crore in the July-September quarter. However, it is crucial to note that while BSNL has turned a profit, it has not yet become a sustainable, profit-making entity.
The improved financials can be attributed to increased revenue from mobility, fibre-to-the-home, and leased lines which grew by 15%, 18%, and 14% year-on-year, respectively. Additionally, cost-cutting measures, reduced finance costs, and government-backed capital infusion contributed to the turnaround, leading to a positive bottom-line impact of over Rs 1,800 crore compared with the previous year.
BSNL revival plan faces roadblock
BSNL is showing early signs of revival. The company asserts that it has been focusing on innovation, aggressive network expansion, cost optimisation, and customer-centric service improvements. A. Robert J. Ravi, chairman and managing director of BSNL, says that with continued efforts, the company expects revenue growth to exceed 20% by the end of the financial year.
In FY24, BSNL’s revenue from operations stood at Rs 19,344 crore, although the company has not disclosed figures for the October-December quarter. Revenue for the six months ending September saw a 10.4% year-on-year growth, reaching Rs 9,235 crore.
BSNL seeks to capture a 25% market share in the mobile subscriber base by next year. The company is deploying 4G and 5G networks using indigenous technology and has already rolled out over 80,000 4G sites, which can be upgraded to 5G.
The government has unveiled an BSNL revival plan. Recently, Union minister for communications Jyotiraditya Scindia emphasised that India’s indigenous telecom stack—currently deployed by BSNL—could emerge as a global alternative to existing telecom technologies. With BSNL leading this initiative, India hopes to strengthen its position as a telecom technology exporter while accelerating BSNL’s transition from 4G to 5G.
Need a viable revival plan
The Boston Consulting Group has reportedly recommended workforce reductions and other major restructuring measures as part of the BSNL revival plan. However, consulting firms often prioritise profit maximisation, cost-cutting, and efficiency over broader public service goals. While such strategies may yield short-term financial improvements, they may not align with BSNL’s public sector mandate.
As a state-owned enterprise, BSNL plays a crucial role in bridging the digital divide, particularly in rural and underserved regions. Aggressive cost-cutting could compromise service quality in these areas, where BSNL remains the only affordable telecom provider.
Instead of drastic cost-cutting, the government should focus on strengthening BSNL’s internal capabilities. This includes recruiting and training top talent, fostering a culture of innovation, and empowering employees to contribute to the company’s strategic growth.
Beyond workforce restructuring, BSNL must also address service quality and technological advancements. Private telecom operators have heavily invested in modernising their networks and adopting new technologies. To remain competitive, BSNL must not only upgrade its existing infrastructure but also introduce innovative offerings that cater to evolving consumer demands. This will require significant investments in technology and a relentless focus on improving service standards.
BSNL’s revival is a challenge that extends beyond financial bailouts. While government support has provided temporary relief, long-term sustainability will depend on BSNL’s ability to modernise, compete effectively, and offer high-quality services. The company must embrace technological advancements, refine its operational strategies, and enhance customer experience to reclaim a significant market share.
The coming years will be crucial in determining whether BSNL can transition from a struggling PSU to a competitive telecom player. With continued reforms, strategic investments, and a clear vision, BSNL has the potential to survive in India’s dynamic telecom industry.