PM to take up BSNL's falling revenue

Concerned over BSNL’s falling revenues, Prime Minister Manmohan Singh is likely to meet the brass of the telecom PSU and Communications and IT Minister A Raja to look into causes and find ways to improve performance.A senior BSNL official said the Department of Telecommunications (DoT) has asked BSNL to be prepared for such a meeting with the prime minister.

The PSU has reported a lower net profit of Rs 575 crore, with total revenues of about Rs 36,000 crore during 2008-09. Revenue and net profit in the previous financial year were Rs 38,000 crore and Rs 3,000 crore, respectively.

BSNL says the loss in net profit and revenue is due to huge wage costs and surrendering of fixed lines, which has led to its basic services revenue falling by 21 per cent to Rs 11,500 crore.

The company has been struggling with the problem of landlines being surrendered for years now, with increasing popularity of mobiles, competition and its own service levels falling below customer expectations. In the past three years, 6.3 million landlines have been surrendered.

BSNL’s failure to add capacity on its mobile network has also added to its woes as it has slipped to number four slot in the mobile subscriber base with private telcos like Bharti, Vodafone Essar and Reliance Communication in the top numbers.

Although not valued by bankers yet, BSNL’s valuation has been pegged at about $100 billion and the PSU has a paid-up capital of about Rs 5,000 crore.

BSNL has also decided to share its towers and infrastructure with other mobile operators, thus opening a new stream of income, the statement said.

A lengthy tendering system to procure equipment has been the most visible reason for BSNL’s falling marketshare in mobile telephony. The PSU’s large employee base of 330,000 acts as a drag on the company’s revenues.