BSNL Dials a Turnaround

8/9/2019 BSNL Dials a Turnaround

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Jamnalal Bajaj Institute of Management Studies

SYNOPSIS

Team Consigliere

Akhilesh Desai

Pooja ShahPriyanka Chordia

Ravi Bansal

Tanma Joshi

BSNL DIALS TURNAROUND



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Introduction

Bharat Sanchar Nigam Ltd., based in Delhi, is one of the world’s largest telecommunications

companies. Formed in 2000, it provides a comprehensive range of services, including Wireline,

CDMA mobile, GSM mobile, Internet, Broadband, Carrier Service, MPLS-VPN, VSAT, and

VoIP.

BSNL is one of the largest Indian cellular service providers, with over 87.1 million subscribers

as of April 2011, and the largest land line telephone provider in India. BSNL is the only serviceprovider, making focused efforts and planned initiatives to bridge the Rural-Urban Digital

Divide. In fact there is no telecom operator in the country to beat its reach, with its wide

network giving services in every nook & corner of country. It operates across India except

Delhi & Mumbai, where MTNL operates.

In spite of all the muscle, BSNL, in recent years, lost its edge to its more nimble-footed private

sector rivals. BSNL mobile and landline subscriber base is declining; broadband subscribers

are also not matching the pace of private players. BSNL has failed to cash in on its huge land

and network assets, which is one of the largest in the country.

BSNL posted a net loss of Rs 1,823 crore on revenue of Rs 32,046 crore in 2009-2010. In its

projections to the Government, BSNL is expected to post a net loss of Rs 2,725 crore on

revenue of Rs 31,738 crore during year 2010-11.The company had made a net profit of over

Rs 10,000 crore in 2005-06.

A company with such an extravagant background and unmatchable assets & resources, not

doing well is a big question in itself. Our team’s aim is to understand the root cause of the

issues faced by BSNL & suggest measures to bring it to its rightful place.



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Rationale behind taking up this project

1. Social Cause

Public sector plays a pivotal role in the planned economic and social development of

India as private sector has neither the necessary resources in terms of funds, nor the

will to undertake risks involved in extremely long gestation investments. BSNL, being a

PSU, has made huge investments in telecom sector spanning all across India. We wish

to leverage BSNL’s large rural reach to bridge the rural-urban communication divide.

2. Economic Cause

The capital employed by the Government in BSNL is Indian taxpayer’s hard earned

money. Thus earning good returns on capital employed becomes indispensible.

3. Scope of Revival

A company that once was knocking on the doors of the elite high performance

‘Navratna’ companies is now left in the lurch by a series of blows dealt by indifferent

Government decisions. BSNL has a unique position because it has a government

backing unlike private operators. Its properties span 3,500 towns across India worth

thousands of crores, making it the largest state-owned companies in terms of land

assets.

Objective

Suggesting key strategies to the company that will help the company overcome the

bottlenecks and in-turn ensure its long term profitability - keeping in mind the hurdles of being

a Government run company.



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Current Scenario

Through secondary market research, the following problems faced by BSNL were identified:

1. Being a PSU, BSNL has inherent problems like bureaucratic delays, long tendering

processes and frequent Governmental interference.

2. BSNL has slipped from number 2 position in terms of number of telecom subscribers in

view of intense competition from the private players.

3. BSNL has missed the mobile revolution from 2007-11 as it did not procure any GSMequipment during this period. The company is now bleeding and unable to match pace

with the fast growing industry.

4. BSNL has to contend with a 300,000-odd labour force and trade union opposition. It is

suffering from financial losses due to huge labour wage cost and declining subscribers.

5. The PSU has a big handicap of not being present in India's two top markets - Delhi and

Mumbai - as in these two metros another PSU - MTNL Operates.

Strategies under consideration

1. To compete in the ever changing field of telecommunication it is imperative for BSNL to

keep itself abreast with the latest know-how of technology in order to provide better

quality services to the customers. Also, serious capacity expansions need to be done in

order to compete with the market leaders in this sector.

2. The overall operational efficiency of BSNL needs to be improved. Currently, salary bill

accounts for up to 48% of the revenues. Creative human resource strategies need to be

implemented for socio-economic welfare.

3. BSNL has lost its brand image as the only ‘low cost pan-India’ service provider. The

brand ‘BSNL’ needs a makeover so that it can recapture the customer mind space it

used to occupy earlier.



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4. BSNL is the only major telecom company in India which does not have access to the

lucrative urban markets like Mumbai and Delhi. Its sister company, MTNL, has entry into

these 2 circles but there too it has not fared well. As a part of our corporate strategy forBSNL, we plan to evaluate the merger of MTNL into BSNL so as to create value by

utilizing the synergies between them.

5. BSNL is the national airwaves carrier and keeping this aspect in mind, we suggest it

should shoulder the social development cause by being a part of the Unique

Identification Project (UID) being run by the government. We suggest a steady rollout of

an ingenious concept of ‘Communication Subsidy’ to the Below Poverty Line (BPL)

families in India.

Approach towards the project

1. Foundation Building

a. Detailed Study of Indian Telecom Sector to understand its niceties and key

aspects.

b. In-depth analysis and critical evaluation of BSNL’s business model to find out theloopholes.

2. Problem Analysis

a. Primary research

i. Interview of BSNL, MTNL and other TelCos’ officials/employees.

ii. Survey of telecom consumers.

b. Secondary research.

c. Analysis of the primary & secondary research.

3. Deliverables

a. To identify key issues currently faced by BSNL.

b. To come up with strategic solutions to the problems faced by BSNL.

c. To give implementable and practicable solutions for a turnaround within a

realistic time frame.

Documents

BSNL Dials a Turnaround