Data | How BSNL bled: The story behind public telecom giant’s fall in 6 charts

On July 27, the Union Cabinet approved a ₹1.64 lakh crore package to revive the state-owned telecom firm, Bharat Sanchar Nigam Limited. While private players are gearing up to deploy 5G services, the government has allocated ₹44,993 crore for administrative allotment of the 4G spectrum. The revival package also includes funding for financially unviable rural wire line services where BSNL is the only effective player.

The government expects that with the implementation of this recent package, BSNL will turn around and earn a profit by FY27. The firm last made a profit in 2008-09. In the last 13 years, the telecom has suffered losses amounting to ₹1.02 trillion.

To realise the goal of turning BSNL profitable in the next five years, a crucial step would be to expand the falling subscriber base. At present, the subscriber base of Jio and Airtel is three times that of BSNL’s. Not only is the subscriber base falling, but the revenue BSNL makes from each user is also a fraction of what private service providers get. The average revenue earned per user by BSNL is 2.5 times lower than what private players make.

An earlier bailout package announced in 2019 helped trim BSNL’s bloated employee benefits expense, halving the losses incurred by FY21. However, the revenue remained stagnant for four years after recording a major fall in FY19. Expanding the subscriber base and improving the revenue earned per user would take care of the shrinking revenue.

In 2005, BSNL commanded a market share of 21%, the same as Bharti Airtel and slightly higher than Reliance Communications. By 2022, BSNL’s share reduced to 10% while three private players controlled the rest of the market. Chart 1 shows the market share of wireless subscribers.

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Chart 2 shows the average revenue earned per user per month (ARPU) by BSNL and other private players. In March 2016, BSNL’s ARPU was ₹118 while private companies earned ₹126. The dirt cheap tariffs with which Jio entered the market forced other players to reduce their charges. This impacted the average revenue of both BSNL and other private service providers. However, the state-run telecom’s ARPU took a bigger hit. When Jio started raising tariffs, private players followed suit while BSNL did not. Consequently, the ARPU of private players improved (₹136) and surpassed the pre-Jio levels but BSNL (₹53) did not catch up.

Dwindling subscribers coupled with relatively low earnings from existing customers took a toll on BSNL’s revenue. From ₹40,000 crore in FY06, revenue halved to ₹19,052 crore in FY22. While revenue dipped, expenses increased to over ₹30,000 crore and remained above the mark for 15 years. Chart 3 shows BSNL’s revenues and expenses in ₹ crore. As a result, BSNL has been consistently making losses for the last 13 years. Chart 4 shows profits and losses made by BSNL in ₹ crore.

Until FY20, employee benefits formed 40% of BSNL’s expenses. Following the 2019 rescue package, a bulk of which was used for funding the Voluntary Retirement Scheme, the workforce was cut down from 1.8 lakh in FY18 to 64,500 in FY21. Yet, BSNL’s share of employee benefits in expenses is higher than the share spent by private companies. Chart 5 shows the share of employee benefits in total expenses.

BSNL played a crucial role in improving teledensity (connections per 100 people) in rural and far-flung areas. Private players have replaced BSNL in the rural wireless segment, but BSNL continues to be the lone operator in the rural wire line segment. The rural wireless teledensity and broadband subscriber rate (per 100 people) has remained flat in the last five years even as the urban-rural gap keeps widening. So, BSNL’s renewed focus on rural areas as a part of its social obligation may help bridge the gap.

Source: TRAI, BSNL, BSE

Also read: Explained | The government package to revive BSNL fortunes