'We'll compete with more 3G, better broadband'

Q&A: Kuldeep Goel, CMD, BSNL

Telecom major Bharat Sanchar Nigam Ltd (BSNL) has been losing market share, with declining revenues, in the competitive Indian mobile market. From being number two, it has been struggling to maintain fourth position. The telco’s Chairman and Managing Director Kuldeep Goel explains his strategy to get BSNL back on track to Mansi Taneja and Surajeet Das Gupta. Edited excerpts:

With BSNL planning to go for a managed services model to roll out networks, do you think it will resolve the earlier problems because of which your 93-million-line GSM tender ultimately got cancelled?
Yes, we have decided to go in for the new model, as suggested by the Sam Pitroda committee. Of course, the issues which were there in the earlier tender cannot be ruled out, such as a disqualified vendor going to court and other procedural delays because of being a PSU (public sector undertaking). Finalising the tender will be difficult, but once we award it under the new model, it will be a much easier and better one. 

But, BSNL’s market share has been reducing continuously and it is expected the company will post losses for the first time in this year. How do you plan to tackle this?
Our overall market share (fixed and wireless) in terms of revenues is about 20 per cent, the second highest after Bharti Airtel at 29 per cent. If you look in terms of mobile subscribers, we are at number four position, with a 12 per cent share. There are 13-14 operators in each circle across the country, which is bound to create some ripple effects. We will try to maintain our 12 per cent market share and innovate with more services in the 3G (third-generation telecom systems)) space, given the competitive scenario. There has been negative growth in the wire line segment but we expect to arrest this by offering good broadband services. 

What’s the latest update on the merger of BSNL with MTNL? There had been some talks by the government on this issue, but we did not see any movement.
There are some benefits and synergies associated with the merger of two telecom PSUs, one of which is enterprise customers who want to have services of a pan-India player. But, there are issues in implementing this, as MTNL is a listed company, while BSNL is not. Besides, the salary structure and pension provisions of the two companies are also different, which could create problems after the merger. If BSNL gets listed, we could see some movement on this side. 

What’s the latest on the company’s plan to go in for listing? What kind of valuations are you looking at? The unions are still opposed to the idea of an IPO (initial public offer), so what will be the way?
The board has accepted the recommendation of the Pitroda committee to go for divestment of 30 per cent stake in tranches. Ten per cent can be divested in the first phase. Once the government decides to go in for an IPO, we will have a dialogue with the unions. No recent valuations have been done, but according to some reports, it could be around Rs 1 lakh crore. 

BSNL was also looking for opportunities in the overseas market. Have you decided on any geography or company as the target? In addition, many people think a deal with Kuwait’s Zain could have been a good one for you. Why did you decide not to go ahead with it?
Currently, we have put on hold our global expansion plans. There were so many developments happening back home, so we wished to consolidate our position in India.

 

We will continue to look for opportunities abroad. The deal with Zain could have been difficult for us, as we are not listed. Moreover, that was a big deal which could have become a long-drawn process with so many government approvals and other things. Plus, there were also some concerns on the partner, the Vavasi Group, which was a relatively small firm. 

What is your plan for rolling out WiMAX services across the country? And, what kind of growth are you looking in the broadband segment?
We have been asked by the government to roll out WiMAX services in 6,000 blocks in the rural areas across the country. We have placed orders for equipment for 1,000 blocks. For urban areas, we have installed equipment in Kerala and Punjab and have appointed franchisees in three states – Maharashtra, Andhra Pradesh and Gujarat. In the other states, we will follow the franchisee model, as it will help us save on capital expenditure.

On the broadband segment, we are targeting a subscriber base of 7.5 million next year – 3.5 million from wire line and the rest from WiMAX and EVDO services. BSNL already has 60 per cent market share in the broadband segment.