If you aren't strong enough to adapt or compete with your rivals, you might as well bow out. Or else, like in the extremely popular book and movie series – The Hunger Games – the other players will have to eliminate you by death.
Competing in the telecom industry in India is nearly a blood sport. First, it hounded out smaller players such as Tata Docomo, Aircel and Reliance Communications. Next, Vodafone and Idea thought it would be better to join forces against the still relatively new entrant Reliance Jio, which seems to power every smartphone in sight. The combined Voda-Idea entity is still reeling under a hefty debt that runs into tens of billions.
In the midst of this crushing battle stand Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL), the government owned telecom companies. Remember when you had no other option besides these two, at least when it came to landline? They reigned as Navratnas till 2012 and 2009, respectively, but today, they are direly short of cash, and have not paid their employees for months. The worse affected of the two is BSNL.
The state-owned telecom behemoth delayed salaries to its bloated 160,000 workforce first this February and again in August. The employees are livid, and the company’s financial situation is far from comforting. In FY18 alone, Bharat Sanchar Nigam registered a loss of nearly Rs.80 billion on revenue of Rs.226 billion. The decline had begun nearly a decade ago and little was done to arrest it. Within five years of garnering profit of over Rs.100 billion, the PSU telecom slipped into the red for the first time in 2010.
An inflated workforce has definitely been a drag, but what has done more harm is an indifferent and inconsistent government. The sad part is that this was once a promising company with valuable assets, but successive governments failed to effectively monetise them, even while delaying its adoption of latest technology and blatantly favouring private players. Any turnaround now won’t be easy and will need Rs.50 billion just to meet opex and capex requirements.
Apart from the aforementioned opex and capex cost, an upgrade to 4G will cost them another Rs.140 billion and the proposed VRS, another Rs.63 billion. The telecom company does have assets in vast land banks and its wide-reaching fibre network, and these are worth Rs.700 billion. But, buyers aren’t easy to