Can the Indian government enhance BSNL’s competitiveness?

Can the Indian government enhance BSNL’s competitiveness?

As 4G delays and subscriber losses continue, it has been reported that the Indian government is looking at ways to improve operational efficiencies in state-owned operator BSNL to enhance its competitiveness.

The potential measures are said to include network upgrades, employee cost rationalisation, enhancement of sales and distribution and providing more value-added services.

Reducing employee benefit costs may be key. Manpower costs at BSNL are still very high despite 78,323 people taking voluntary retirement after 2019. BSNL currently employs around 59,000 people.

According to the Economic Times news service, its staff cost as a percentage of total revenue stood at 38.4% in FY23. Vodafone Idea is about a tenth of that at 4%. Reliance Jio spends around 1.8% of its revenue on employees, while the figure for Bharti Airtel is about 2.3%. 

There is also the question of when 4G services will be nationally available, especially as two of the private players now offer 5G. 

In an effort to enhance productivity of BSNL staff, a memorandum of understanding (MoU) was signed between BSNL and the Department of Telecommunications (DoT) to improve the working culture. A key performance indicators (KPI)-based management system was put in place to measure the productivity of the staff.

After various revival packages, BSNL and the much smaller state-run operator MTNL started earning operational profits from 2020-21. BSNL also received 4G/5G spectrum and awards of various project works including the BharatNet project aimed at bringing broadband connectivity to nearly 625,000 villages.

Will this be enough? BSNL has already faced dire warnings about the 4G rollout delays from its own workers union. It is also steadily losing subscribers to its rivals; its mobile service ended December with close to 92 million users. In August 2023, BSNL Mobile had a subscriber base of 95.8 million.

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