BSNL to make profits again by 2018-19 with a focus on data services

BSNL making losses mainly from deprecation of assets and administrative costs, which account for 55% of total revenues

You have taken over the reins of BSNL at a critical time. The PSU has been making losses since last 3-4 years and performance has dipped on many other fronts as well. What is your immediate priority?

BSNL has been making losses mainly from deprecation of assets and administrative costs, which account for 55% of the total revenues. However, there is a silver lining as well, we making operational needs meet through our topline.

We are comfortable as far as EBIDTA levels are concerned. With a topline of Rs 28,000 crore and debt of Rs 4,500 crore, the situation is not that bad, though it is critical and can be revived. The first priority is to change the direction of the company in such a way that losses get reduced year after year and there is enough compensation on depreciating assets.

What measures are you taking to achieve this? Also, in the past, BSNL has not been able to add new lines/capacity because of various reasons. Is BSNL now equipped enough to meet the changing times of the market?

We have to first look at what went wrong and figure out what should be done now.

After analyzing the situation, we realized we missed the mobile/voice bus in 2006 when the industry was progressing and penetration of mobiles was just 40-45%. Till 2005, BSNL was the topmost telecom operator. We lost the race after that as our tenders for capacity addition could not succeed and we were deprived of equipment for adding new customers.

Now after 4-5 years, the penetration of mobiles has moved up to over 90%. This is the journey - mainly voice -- which BSNL has missed. But, we want to make sure we are the leaders in the next journey of data services. The age of voice is over and data is the next thing. We are in a strategically place position, be it mobile, landline and a huge optic fibre network.

How do you plan to leverage your huge network, especially landline and the optical fibre? Are there any plans to integrate all services? Also, what is the kind of capex you are looking at for expansion?

We have invested Rs 4084 crore in improving and expanding our mobile services. We are in the process of plugging in holes and upgrading our core network. The purchase orders were placed last year and network started rolling out in June. Almost 75% of the project has been completed in North and South zones. In East zone, 35% has been completed and West has just begun.

We have a big landline base and with huge copper cable and fibre, the focus goes to Wifi. Will offer Wifi hotspots wherever it is commercially viable and offer an experience similar to 4G services. Also, we plan to launch our 4G services by 2016. The plan is to integrate Wifi with our mobile network to give users a seamless experience of 3G and Wifi services.

We plan to invest Rs 39,000 crore in the next five years, where a major chunk will go towards data side. The focus is on improving core network capabilities as we intend to exploit data which is growing very fast. We will not miss the second bus of data. 2015 is going to be a watershed year for BSNL.

Currently, how much revenues come from data segment and what is the target?

The mobile services contribute Rs 13,500 crore, out of which 10% - Rs 1350 crore comes from the data segment and is consistently rising. From broadband services, we earn Rs 7500 crore. Going forward, we expect revenues from combined data and broadband services to atleast double to Rs 15,000-16,000 crore in the next 2-3 years.

Lastly, you mentioned about huge administrative costs. There was a proposal to offer VRS to your employees to reduce the cost. What is the status of this proposal? Also, what is the target for bringing BSNL back to profits?

The VRS proposal was debated last year and would have required Rs 12,000 crore outgo. But there was doubt in the success of the plan - whether it will be taken up or not and what if good skillful people opt for it making the whole purpose of VRS futile.

So, an alternative proposal was considered to give salary support to the employees. It would require Rs 6500 crore which the ministry in-principle agreed to give as a soft loan for a period of 10 years and with less interest. Both the proposals are pending with the ministry, which will take a final call on this matter.

Last year, the losses were around Rs 7600 crore and in the previous year, it stood at around Rs 8,000 crore. So, the losses have already started coming down slowly. And we expect BSNL accounts to be back in shape by 2018-19 and start making profits.