Facts on the financial condition of BSNL

  1. Loss in 2009-10= Rs 1823 cr;
  2. Monthly expenditure more than monthly income=Rs 600 Cr.
  3. Cash reserves on 31-3-2010=Rs 30343 Cr and at present Rs 10000 Cr (Rs 18500 crore paid for 3G and BWA spectrum fee, and remaining amount expended for other activities including meeting the monthly expenditure exceeding income).
  4. Interest income in 2009-10 on cash reserves is Rs 2472 Cr and it will be nominal in 2010-11 since cash reserves are over.
  5. Income on services declining continuously

      2005-06=36138 cr; 2006-07=34616 cr; 2007-08=32842 cr; 2008-09=30169 cr;                   2009-10=27913 cr;       (average decline per year=Rs 2000 cr)

    1. Salaries expenditure is increasing continuously.

2006-07=7309 cr; 2007-08=8809 cr; 2008-09=10331 cr(excluding wage revision arrears); 2009-10=10555(excluding arrears). The salary bill of 2006-07 was 21% of the income on services where as in 2009-10 it was 38% of the income on services. Average increase per year in the salary bill=10555-7309=3246 Cr /3=1082 cr; Compensation of Rs 2000 crore per year to BSNL for the losses on rural land lines will not be there from 2011-12 onwards.

    1. Since cash reserve is over, BSNL has to take loans to finance part of its operational expenditure and to finance capital expenditure(expenditure required for network expansion). Servicing the loans taken will be another additional expenditure.

                Likely scenario if the present trends are continued

·         As per a news paper report the loss for BSNL will be Rs 4000 Cr in 2010-11 and Rs 10000Cr in 2011-12

  1. Does this mean BSNL became sick company?

As per DPE guidelines a PSU will be considered 'sick' if it has accumulated losses in any financial year equal to 50% or more of its average net worth during 4 years immediately preceding such financial year. As per the 2009-10 accounts of BSNL , its net worth is Rs 86476 cr. The loss for the year 2009-10 is Rs 1823 cr only. Therefore there is no immediate reason for declaring BSNL a sick company. In case the losses go on increasing and the net worth goes on decreasing, then it will take a few years for BSNL becoming sick. Therefore there is a few years time available for us to prevent BSNL from becoming sick and to make it profitable once again.

  1. How to reverse the losses of BSNL

v     Government must be compelled to take policy decisions to compensate BSNL for the loss making operations carried out as a social obligation.

v     Certain social obligations are preventing BSNL from procuring equipment as fast as in case of private operators. Being a PSU it has to follow all the tender rules and procedures for procuring the equipment in   spite of the cut throat competition in telecom sector which requires quick procurement of equipment required    for increasing the capacity to expand and modernise the services and to grab the market.

v     Cancellation of the illegal licenses obtained by the private operators in the 2G spectrum scam.

v     While the private operators were allowed to bid for 3G license in the chosen Circles based on commercial considerations, the BSNL was compelled to pay the 3G spectrum fee for all circles(excepting Delhi and Mumbai where it has no presence). Thus while BSNL paid Rs 10186 crore for pan India 3G license, Airtel paid Rs 5731 crore only for the chosen circles based on commercial calculations. Similarly regarding BWA spectrum license also BSNL was compelled to pay the pan india license fee of Rs 8313 crores whereas the private operators like RCOM, TTSL did not participate in the BWA auction based on their commercial calculations.

v     While BSNL is being asked to carry out wi Max rural project, it has been provided with a fund of Rs 710 crore only whereas the acual cost on no profit/no loss basis will be Rs 2395 crores.

v     We should recognize the denial of due compensation to BSNL for the loss making social obligation activities as the main reason for the losses to BSNL. The following are to be recognized as the loss making social obligations being carried out by BSNL for which there should be adequate compensation from Government:

v     Rural land line network installation, maintenance and operation

Delay in procurement of equipment arising due to following the public sector procedure and due to the necessity for meeting the requirements of national security(explanation on this is available in para c) below.

v     Providing 3G services in all circles irrespective of the commercial considerations.

v     Maintaining the TACs(Telecom Advisory Committees) which are not the requirement .

v     Collect the amount swindled by the private operators in the 2G scam and use it for reimbursing the 3G and BWA license fee collected from BSNL.

v     Procurement of equipment without delay and by proper planning.

v     Experts genuinely interested in reviving BSNL as a profitable PSU be recruited as CMD and Board Of Directors and the issue of ITS absorption be settled immediately.

v     BSNL should be given the work of laying the optic fibre cable under National Broadband Plan without forming any agency like NOFA for that purpose.

v     Management should adopt proper marketing and sales strategies.

v     Employees should reorient their work culture and every employee should work like a sales representative for BSNL products and also must take an active part in going to the customers for attending their grievances.

v     All types of unnecessary expenditure should be curtailed.

  1. Where to start

The starting point for revival of BSNL cannot be any other thing except the commitment of the employees of BSNL for saving it and consequent reorientation in their attitude to extend better service to the customer, increase the sale of BSNL products, putting pressure on the management at all levels for reducing the unnecessary expenditure and for adopting better sales and marketing practices, fighting against the anti-BSNL policies of the Government and achieving due compensation to BSNL for meeting the social obligations as detailed above and also for procuring equipment without undue delay. The Government is adopting the anti-BSNL policies due to pressure from foreign and Indian big capitalists in telecom sector and due to its orientation to work for their profits. It requires a serious struggle for changing these policies. For this the support of the people and the realisation among the people about the necessity for a viability of BSNL as a PSU is required. For this, we have to go to the people to serve them better and to tell them about the necessity for saving BSNL.