Disconnected decision makers likely to keep BSNL headless

Amidst increasing competition and declining market share, state-run telecom major Bharat Sanchar Nigam Ltd (BSNL) may find itself without a fulltime chairman and managing director for quite some time, after the retirement of incumbent Kuldeep Goel next month.

The selection process for his successor has been sluggish. The Prime Minister’s Office (PMO) has asked the department of telecommunications (DoT) to set up a committee, headed by the Cabinet Secretary, for selecting the next BSNL chief. DoT has said this would take time, so the government should select BSNL’s chief as in the current procedure, a senior ministry official told Business Standard.

Currently, candidates for central public sector companies are selected by the Public Enterprises Selection Board (PSEB). The date for interviewing candidates has already been postponed thrice. The last date for applications was December last year. The interview process was earlier scheduled for April, then postponed to May, then June 8, which also did not happen.

Nor has the post of CMD of the sister telecom PSU, Mahanagar Telephone Nigam Ltd (MTNL), been filled since January. MTNL’s Director (Technical), Kuldip Singh, was given additional charge of the CMD’s job. DoT is yet to decide if it should follow the new procedure or not.

Differences on Pitroda
To take BSNL’s selection process out of PESB and set up a screening committee, the DoT would have to work out new guidelines for selection, eligibility criteria and incorporate a market-driven salary structure, among other things. The Sam Pitroda review committee’s recent report (Pitroda is the PM’s advisor on the sector) had said the government should employ people from the private sector and pay them a market-linked salary.

The department says this process would require time for implementation, which can impact the functioning of the PSU, as the CMD post might be vacant till the new policy is put in place, the official said.

However, due to these differences, the whole process has been delayed and the government might have to give additional charge of the BSNL CMD to a Director, the official added.

According to BSNL officials, this might create more problems, with the company already facing a tough time with the arrival of new telecom competitors. BSNL once had a market share of 20 per cent and this is now 12 per cent. It was also giving tough competition to market leader Bharti Airtel till two-three years before, but now has slipped to fifth position.

The procedural delays related to purchase of equipment and dependence on the government for decision making approvals are hampering the company’s growth. BSNL’s 93-million-line GSM tender was cancelled due to various controversies and differences . The company is facing a huge capacity crunch in many places. The Pitroda committee had also suggested BSNL go for outsourcing of network management, a system followed by other competing private telecom companies such as Bharti Airtel. DoT is yet to act on the Pitroda recommendations.

BSNL is expected to make losses for the first time in 2009-10, of about Rs 2,600 crore. For the nine months ended December, the company has made a profit of merely Rs 150 crore, but has to pay out over Rs 3,000 crore as arrears on pay.