Public CompanyPMO calls meeting on BSNL on January 6
The Prime Minister’s Office (PMO) has convened a meeting with the telecom ministry on January 6 to discuss the issues plaguing state-run telco BSNL, including its declining revenues and market share.
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The meeting comes amid the ongoing controversy over its Rs 35,000-crore tender for adding 93 million GSM lines, and this issue may also come up for discussion.
“The January 6 meeting was fixed long ago by PMO. It will discuss a number of issues concerning BSNL, to improve its performance. It is not exactly to discuss the tender and the CVC probe into it. It may discuss expansion plans as a whole,” BSNL Chairman and Managing Director Kuldeep Goyal said here today.
It could not be ascertained whether Prime Minister Manmohan Singh will chair the meeting or PMO officials will meet the brass of the country’s largest telco.
Concerned over BSNL’s falling revenues, PMO had asked the company brass and Telecom Minister A Raja to look into causes and find ways to improve the performance. The PSU had reported the lowest net profit among the telcos, of a paltry Rs 575 crore on a revenue of about Rs 36,000 crore last financial year.
Besides, BSNL has been consistently losing market share in the mobile telephony business due to the stiff competition by private players and its inability to expand network on time. BSNL has failed to undertake any capacity addition in the mobile network space in the last two years. Its latest 93-million GSM lines contract has run into a Central Vigilance Commission probe, stalling the expansion.
Asked for the reasons behind the CVC probe when BSNL had already identified Ericsson as the lowest bidder (L1) for two zones and was involved in the post-tender price negotiations, Goyal said, “The CVC hasn’t said anything specific while seeking the probe. I would not like to question their jurisdiction (to seek a probe) but we hope that they would conclude the probe fast we would be able to go ahead with our expansion plans.”
BSNL has already put its $10-billion tender (which has already been delayed by over a year) on hold following the CVC probe.
Asked if the guidelines forbid post-tender negotiations with successful bidders, Goyal said, “I would not like to comment on that.”
The Swedish telecom major Ericsson had emerged as the lowest bidder in the North and Southeast zones while the Chinese firm Huawei was selected for the South and West zones. However, later Huawei was removed from the West zone after the home ministry raised security issues over it.
BSNL’s revenues and net profit in the previous financial year were Rs 38,000 crore and Rs 3,000 crore, respectively. It says the sharp declines in net profit and revenue is due to huge wage costs and the surrendering of fixed lines by consumer which has led to its basic services revenue fall by 21 per cent to Rs 11,500 crore.
BSNL’s performance started slipping three years ago. In 2005, BSNL added more subscribers than Bharti Airtel. It got a setback when its first tender for 63 million lines in 2006 was delayed after Motorola went to court.
The largest telco in May 2008 floated the 93 million lines GSM tender and that too hit a roadblock after Nokia Siemens Networks, after being disqualified on technical grounds approached CVC and multiple courts.