Liberalisation (1994-2010)whither BSNL

By

Dr T.H.ChowdaryDirector: Center for Telecom Management and Studies

Chairman: Pragna Bharati (intellect India )Former: Chairman & Managing Director

Videsh Sanchar Nigam Limited &Information Technology Advisor,

Government of Andhra PradeshT: +91(40) 6667-1191(O) 2784-3121®

F: +91 (40) 6667-1111hanuman.chowdary@tcs.com

Talk @ BSNL, Hyd : 30 Sept 2010

Before NTP-1994

• Apply, Apply ; No Reply• Huge waiting lists - Mumbai Registered only

OYT• “it is not compulsory to have a telephone”• “Pay up first; complain later”

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Time taken to add a million telephones

1 Mln 2nd 3rd 4th 5th 6th 7th 8th

Year 1972 1980 1986 1989 1991 1993 1993 1994

Years 90 8 6 3 2 1.5 1.0 .75

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Time taken to add millions of telephones

Telephones 1 Mln 5 Mln 10 Mln

Fixed 90 109 114

Mobile 3 5 7

* We are now adding (15 to 17) mln phones/month

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Cost of an year’s telephone service compared to PCI

Year 1951 1994 2010

PCIX 2.5 1.0 0.06

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PCI= Year’s per capita income

What constrained• Inadequate investment• Equipment available less than investment could buy- so, (delayed)

imports • Project sanctions- Account writers

- Postal officers as Dir(F) & M(F)• Employment creation • For 15 to 20 phones, we had one employee• Technological lag.

– Strowger factory while X-bar was in – X-bar factory while ESS’s were in – Analogue ESS when digital was in – Analogue MARR while digital radio was in – Every technology was imported – wanting latest and proven?

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PCI

AX TSP

Time

Affordability

A PCI/ Tele-Service Price- PCI: Per Capita Income- TSP: Telephone Service Price- A: Affordability

Bring down price to increase affordability

Liberalisation• Invite investment by demonopolisation – New

technology brings down cost (from Rs. 40,000 per wired phone to Rs. 3000/- for cell phone (hand set cost by sub)

• Competition brings down price• Regulation creates Level playing field• DOT X P-Telcos – non-level• BSNL X P-Telcos – Less non-leveled• Competitor enters with new technology & new

business models

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BSNL not prepared & trained to compete (1)

• Marketing (subscriber or customer?)• Legacy costs ( staff)• Segmented price-service packages• Top Managers on Deputation • Compensation for staff & management dislinked from

company fortunes • No Business Sense (eg: tower lease; out-sourced retail) - Finance is blood for Cos• Compete on QOS or Price (new concept: quality of experience by customer)

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BSNL not prepared /trained to compete (2)

• Prepaid-a remarkable invention; not by BSNL• Board of Directors & CMD & other Executive

Directors• State Ownerships

– Minister as overlord– Parliament & CAG– Vigilance– Recruitment– Labour Lordism

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Growth of Wired Phones in India

14.54

0.34

17.8

0.88

21.63

1.2

26.79

1.88

32.97

3.58

39.136.43

41.42

10.4846.32

17.4

44.87

48

45

56

48

92

40

210

39

310

0

50

100

150

200

250

300

350

Subsc

ribers

in m

illions

1997 1998 1999 2000 2001 2002 Dec '03 Aug '03 Dec-'04 April-'05 March'06 Mar '07 J uly '08

Years

Cellular mobile phones ( PSU + pvt )

Fixed line telephones including WLL ( PSU + pvt )

Source : DOT Annual Report 2003

Total 340 mln = as of Oct’08

Cell Phones subs of the top 5 Telcos (July 2010)

Bharti RCom Vodafone TataTel BSNL

Subscribers(mln) 139 113 111 77 73.7

Market Share(%) 21.34 17.37 17.08 11.47 11.31

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Revenues of Telcos (Rs. Bln) for 2009-’10

Bharti BSNL Vodafone Reliance Idea Cellular

388 (+5%) 302(-14%) 232(+13.7%) 221(+3.5%) 114(+11.8)

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BSNL’s Revenues & Profit/LossesYear Revenue (Rs. In blns) Profit (Rs. In blns)

2004-2005 361 101.8

2005-2006 402 89.4

2006-2007 397 78.1

2007-2008 380 30.1

2008-2009 358 5.75

2009-2010 308 (-)14

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What is to be done (1)

• ARPU will come down• New Business Model ( off-load work)• Incentives – ESOPS• Privatization – by statute• British Telecom Way• Golden Share for government• Preferential Equity to Employees ( discounted price)• Wind up Telecom Commission

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What is to be done (2)

• Massive Retraining• Go the VSNL way – a global co• Spin off “circles” as independent cos • An inter-state & an International co• All as fully owned subsidiaries of BSNL• Why are you not celebrating the event – A Decade of Dedicated Service

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Dhanyawad:Thank You

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