Flogging a Dead Elephant – BSNL
Back in February 2021, I had written an article in this magazine titled “Flogging a Dead Horse” – about Kolkata’s tram company.
Actually, this company has just 2,000 people and Rs15 crore of annual loss. Hence, it is not quite horse-sized—maybe just a little pony.
What about Bharat Sanchar Nigam Ltd (BSNL)—62,200 employees and an annual loss of Rs7,000 crore? An elephant, surely!
A quick look at BSNL:
- Loss of Rs7,000 crore on an annual income of Rs19,000 crore.  
- Fixed assets of Rs98,000 crore, i.e., each rupee of fixed assets generates less than 20 paise of income.
- Rs886 crore written off in the year.
- Client base shrinking steadily while the market is expanding.
- A decade behind in technology in a hi-tech business.
There are many more juicy numbers lurking in the nooks and crannies of BSNL’s 516-page annual report for FY20-21, but I think I have said enough to justify the term ‘dead elephant’.
Then, let me take a break to tell you a story—just to show that I love BSNL and shall be ever grateful to it.
Upon return to Kolkata after retirement, I faced an unforeseen problem—address proof. I could not produce any ‘evidence’ that I lived somewhere. You see, I had rented a flat and had a tenancy contract, but that is not adequate ‘address proof’. 
Without the address proof, I could not get anything going—phones, gas connection, and car purchase.
My friend gave me a tip. “Try BSNL,” he said. “They have no customers.”
Sure enough, the spacious BSNL office in Jadavpur had half a dozen people sitting behind the counter but nobody in front of it.
I decided to play big and chose the most expensive broadband plan available—Rs5,500pm (per month). That worked! Everyone gathered around to watch this great event happening—someone actually buying the mega plan.
I did the 'needful' by way of form-filling, but the hitch that I was dreading reared its ugly head.
“This won’t do,” said the BSNL karmachari, 'tenancy contract is not a valid proof of address.'
Immediately, five others jumped on him.
“Are you mad?” they fumed. “Sir is buying the mega plan, and you are spoiling it!”
This collective pressure made the conscientious objector relent, and I got my connection.
Next month—the BSNL bill arrived at my rented flat. 
Address proof at last! The BSNL bill was a valid document for proving where I lived.
I quickly signed up for all the other things that were on hold, and my job was done. Then, I am somewhat ashamed to admit I cancelled BSNL and signed up with Tata Docomo.
Confession done—now let us move on to the flogging part.
BSNL has a market share of less than 9%. Its mobile subscription base has been dropping since January 2021. In January 2023 alone, BSNL lost over 1.5mn (million) users. This is despite BSNL charging significantly less than other service providers.
The reason is not hard to find. BSNL is woefully behind the times. It is still on 2G/3G, while its competitors have moved on to 4G more than a decade ago. Airtel first introduced 4G in 2012 and when Jio entered the market, 4G became the norm. Alas, BSNL was nowhere.
The story is much the same for broadband. From being the market leader some years ago, BSNL is now a distant third and continues to lose customers while new users are coming in to expand the user base.
Even in the landline segment, BSNL has lost market leadership to Jio. 
How does BSNL carry on, then? 
Partly because BSNL has a bunch of (reluctant?) customers—government departments and public sector banks (PSBs) who continue to use BSNL.
And flogging, from time to time, by the owner—government of India (GoI).
Back in 2019, GoI gave Rs74,000 crore to BSNL, primarily to reduce its staff headcount through a voluntary retirement scheme (VRS). This did work, and the number has reduced to 62,000 at present from 1,83,000. But the fundamentals have not changed, and the business continues to slide downwards.
Time for another flogging and a bigger dose, too.
Last July, GoI announced a further Rs1.64 lakh crore bailout for BSNL, comprising of cash conversion of debt to equity and free 4G spectrum. Recharged, BSNL moved to launch 4G.
But wait...an elephant doesn’t rush, does it? 
Facing 'continued hyper competition' (words from BSNL’s chairman & managing director-CMD), which is intensifying all the time, BSNL took only 10 months to award the 4G contract to Tata Consultancy Services (TCS). Heaven knows when BSNL will actually launch 4G. In the meantime, Airtel and Jio will be well set in 5G.
Why is GoI repeatedly pouring money into BSNL?  Three stated reasons:
- Telecom is a vital sector in which GoI must have a presence through a State-run telco, apparently for security and prevention of cybercrime.
- Private telcos focus only on profits and do not service remote areas or poorer people.
- India should not have a duopoly in telecom (Jio and Airtel), and there should be a third player in the market.
Lofty goals, indeed.
But, in my view, BSNL is not positioned to deliver, regardless of how much money (your money and mine, my dear sirs) is poured into it. Too many basic things are wrong with it—company culture, employee morale, lack of skills, elephantine ways of operation. It will need a complete overhaul of many segments, which cannot be done by merely pumping in money.
Moreover, a CMD brought up in the ‘babu’ mode cannot compete with the likes of Mukesh Ambani and Gopal Vittal.
What then?
The bailout money of Rs1.64 lakh crore would cover all external liabilities (Rs82,000 crore) plus 10 years’ salary to all staff (Rs58,000 crore) and still have Rs24,000 crore to spare. There would also be freehold land worth Rs63,000 crore (book value), as well as other fixed assets (mobile towers and fibre optic cables) worth Rs20,000 crore.
Need I say more?
What about the lofty goals of a state-run telco, competition and all that?
Sorry, I don’t know the answer, but what seems quite apparent is that BSNL will not achieve these goals, no matter how much taxpayers’ money is poured into it. BSNL’s goals will have to be met in some other way.
Remember, GoI did leave another important sector—air travel—by finally selling Air India. BSNL should be next. 
Maybe a private party can revive BSNL the way the Tata group is planning to revive Air India. 
Better for everyone. 
While Moneylife appreciates readers expressing their views on our articles, there is no place for personal abuses against the author or orchestrated comments. Due to this, we are disabling comments on this article.
(Deserting engineering after a year in a factory, Amitabha Banerjee did an MBA in the US and returned to India. Choosing work-to-live over live-to-work, he joined banking and worked for various banks in India and the Middle East. Post-retirement, he returned to his hometown Kolkata and is now spending his golden years travelling the world, playing bridge, befriending Netflix & Prime Video and writing in his wife’s travel blog.)
12 months ago
Don't blame BSNL. You were also responsible for this. Why did you disconnect your connection from BSNL? Why did you not complain against the employee with the BSNL Management instead disconnection?

Now the government takes all steps to improve the situation. We must wait till 2024. The new 5G towers more than One lakh in numbers are going to be completed. Then the situation must change.
Amitabha Banerjee
12 months ago
Friends, please let us see this from the perspective of the money being spent. The bailout announced by the government for BSNL in July ’22 was Rs 1.64 lakh crores. Please compare this to the central Government’s budgetary allocations budgets for ’22-’23 - Education – Rs 1 lakh crore, Health – Rs 86,000 crores, Railways – Rs 1.4 lakh crores, capital outlay for Defence – Rs 1.52 lakh crores. We are not talking about a few hundred, or even a few thousand crores, to prop up an ailing PSU. Is the nation benefiting adequately, in terms of value for money, by spending so much on BSNL?
12 months ago
Sir bsnl is white elephant than why Vodafone sailing in same boat it's having technology . If vodafone can't able to deliver 4g how u can expect bsnl to compete with its 2&3g. You cant expect srilanka to fight with America.
12 months ago
Sir that is very irony, BSNL will surely achieve the target once full fledged 4 G is launched.
Even it's 3G is also of good quality in Delhi NCR, I'm using it as secondary sim Since 5 years.
I Love India
12 months ago
But you forget to tell about Vi which being supported by Vodafone and Birla. Which is reporting quarterly loss of about Rs.7000 crores even with 4G. You said BSNL is generating a revenue of Rs19000 crore with outdated 3G service. Then BSNL can show wonders with 4G and 5G. Now only BSNL is getting support from GOI and now things are going well with make in India initiative.
Amitabha Banerjee
Replied to I Love India comment 12 months ago
Thanks for your views. Re Vodafone-idea,#1. They are burning shareholders' money, no concern of mine. But BSNL's money is taxpayers' money. #2. Despite deep pockets and extensive expertise, Vi has been pushed out by Jio and B-A. Can Mr Vaishnaw (my best wishes to him) do what Vi could not do? Yes, I admire the way Railways have improved, and am very hopeful of the revival of Air India under tat group. But, why is it necessary for GoI to spend scarce resources (including Mr Vaishnaw's time and energy) on something that has little likelihood of success? By all means - Atmanirbhar Bharat. But, are Jio and B-A not part of Bharat?
Replied to Amitabha Banerjee comment 12 months ago
Mr. Amitabh do you know loan liability of Vodafone from Indian banks , is this money belongs indian tax payers or share holders or your father . Don't blame indian PSU with your half knowledge.
Replied to Amitabha Banerjee comment 12 months ago
Sorry, you got most of it wrong Mr. Banerjee.
Your first emphasis should have been on how the present Govt of corporate cronies deliberately to undermine and finish off the PSU company.
Earlier BSNL mobile telephony would reach every nook and corner of the country when the much touted private players would fail to deliver.
You expect BSNL with its 3G to compete with players which are already dishing out 5g service??
I am using BSNL fibre broadband which gives pretty good data speed. And in case of disruption in service an online complaint is sufficient to get it restored in less than a day.
I happen to live in the pathetic "smart" city of Varanasi (PM constituency) where the condition of many public services are extremely poor and unprofessional. I believe BSNL works quite well in South India and all big cities.
It's also intriguing to see your silence on how the present Govt handed over many BSNL towers across the country at very favorable conditions to Jio to facilitate expanding its business (after all Saheb had to oblige the masters, Ambanis isn't it?)
Replied to Amitabha Banerjee comment 12 months ago
You are requested to take BSNL Bharat Fibre, then share experience. It has crossed 3 million customer base at the end of April. Respected Amitabha sir.
Replied to bookbloggerboy comment 12 months ago
12 months ago
Whilst I generally agree with the author on most subjects I have a nagging feeling that in this BSNL subject he may be wrong. This is because we have one of the most inspiring and entering Telecomm minister who I believe can do wonders! The way Railways has been revived and made profitable by this minister is amazing to say the least. So I would keep my fingers crossed on this one..
Amitabha Banerjee
Replied to anant.9196 comment 12 months ago
Hello Mr Anant. Thanks for your comment. Yes, I agree that Mr Vaishnaw is a ray of hope in the BSNL's revival attempt, but as another reader told me, it is likely that the government will spruce up BSNL improve its valuation, do another VRS to shed the older employees, and, after the 2024 elections, sell it off. An asset stripper will be able to sell off the land. building, towers etc at prices substantially above book value.
Replied to Amitabha Banerjee comment 12 months ago
My brother, who lives in Pune, is another of those who use BSNL broadband even today. He has their highest speed connection. His experience is no different from yours - when it works it is fine, when it is down - it is out for 4-5 hours at a stretch with no clue as to when it will restart. He too is in the process of getting an alternative. This is not how services can be provided anymore - especially tech!
Replied to sucheta comment 12 months ago
PS: it is BSNL fibre!
Replied to Amitabha Banerjee comment 12 months ago
PSUs are deliberately restricted to promote the growth of capitalistic people. If BSNL is properly supported with proper infrastructure and recruiting skilled workforce, no other operator is actually needed. Amitabha sir's choice to utilise the chance to BSNL just to get a bill then discontinue it tells how much cunning he is. That is why westernised people have actually no role in developing India properly.
Amitabha Banerjee
Replied to humanityequality7 comment 12 months ago
Hello ! Yes, "cunning" is possibly a well deserved epithet. However, I omitted to mention that I actually had the BSNL broadband connection for 7 weeks - from the time it started until the time when the first bill arrived. In this period it broke down no less than 4 times. Each time I got no joy from calling BSNL, and had to visit a decrepit BSNL service office where I was met with apathy and indifference, and a 1-2 day wait ensued before the connection was restored. Hence my cancellation of the BSNL subscription was not entirely selfish and cunning.
Kamal Garg
Replied to Amitabha Banerjee comment 12 months ago
Such stories about PSU employees' apathy and complete disregard for any customer/service/quality are a plenty in market place.
Replied to anant.9196 comment 12 months ago
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