What Led To BSNL’s Downfall: Discover Out Here
Between 2000 and 2010, the telecom market was characterized by fierce rivalry, which kept both commercial and governmental network operators on their feet. The growth and eventual demise of Bharat Sanchar Nigam Limited occurred in the early 2000s. The public sector undertaking (PSU) was established under the government’s auspices in October 2000, and it made its first deficit in the 2009-2010 fiscal year.
Bharat Sanchar Nigam Limited (BSNL) was well-known for having a loyal client base. However, in today’s market, BSNL is unable to compete with Jio, Airtel, and Idea. There are numerous causes for a company’s collapse that had a significant influence on the company’s downfall.
The corporation was unable to recover from its losses due to a series of disastrous decisions taken by the government in 2006. Many BSNL employees are now opting for voluntary resignation in order to receive their retirement benefits before the company goes bankrupt.
Factors For The Failure
Many telecommunication analysts blame the PSU’s downhill trajectory on enormous red tape and delayed decision making. Even as recently as 2019, BSNL was the most dependable fixed-line service provider, but it was unable to compete in cellular operators with its dynamic private rivals.
The high monthly payments for its staff accounted for 55 to 60% of the company’s spending, which was bolstered further by reduced rates and more competition from other growing firms. Persistent and unregulated government meddling, as well as staunch opposition from unions to selling a share in PSUs, may be blamed for BSNL’s poor state of things.
With the introduction of Jio, Mukesh Ambani’s Reliance took the biggest chunk of the telecom market. The action had such an effect that other telecommunications companies such as Vodafone, Idea, and others fell off the spotlight. The big migration to Jio was a tremendous blow for BSNL and other telecom operators. Small network providers just vanished, while others went bankrupt. To offset their losses, Vodafone and Idea combined, but Airtel managed to stay afloat. However, given the existing scenario, none of the enterprises can compete with Reliance.
1. Employees Of BSNL Are Facing A Lot Of Problems
Multiple employees which have yet to be paid for the month . This is the first time in 18 years that the company has failed to pay its employees’ salary.The employees were expected to get their paychecks on February 28th. In other areas, the situation for contracted staff is much worse, as they have apparently not received their salary for the previous three months, while many have not got a cent for the last six months.
2. Increased Competition And Reduced Tariffs
BSNL, the state-owned telecom corporation employs around 1.76 lakh people, and with staff costs accounting for 55-60% of total spending, as well as factors such as more competition and cheaper tariffs, the telecom PSU has suffered.
3. Poor Management
Poor management, policy stagnation, unnecessary political meddling, and a lack of autonomous operating are the key reasons for Bharat Sanchar Nigam Limited (BSNL), India’s only public sector enterprise (PSU) in the telecom industry, according to top executives and business sources.
4. Impending Causes Of Failure
According to analysts, the PSU’s impending demise began in 2007-2008, when the corporation failed to enhance network infrastructure due to different tender delays. Furthermore, government intervention, even at the micro level, lengthened and varied decision making.
Many previous plans for a stake sale were greeted with severe resistance from BSNL unions, which also posed a significant barrier to the company’s privatization.Since 2011, a voluntary retirement plan (VRS) has been in the works, although no final decision has been reached.
5. Delayed In Incorporating Modern Networks Such As 4G and 5G
Whereas the majority of the nation is enjoying 4G services on their phones and trying to transition to ultra-fast 5G networks, the government-owned telecom operator has yet to provide 4G services for its customers. Following a Cabinet decision, BSNL was allocated 4G spectrum on October 23, this year, although private telecom companies had got 4G spectrum nearly four years earlier.
Government Take To Rescue The BSNL
The BJP administration has agreed to rescue out the loss-making state-owned telecom company with a Rs 74,000 crore bailout program (including MTNL). The Ministry of Telecommunications has also resolved to reduce staff at both firms (BSNL and MTNL), as manpower accounts for around 70% of the entire cost borne by these organizations. In order to reduce the debt-ridden BSNL’s personnel, the corporation launched a VRS (Voluntary Retirement Scheme) for its employees, which has already been opted for by over 70,000 people.
The Department of Telecommunications (DoT) is reviewing a BSNL resurrection package that was filed in 2017.The firm has filed a thorough project study for the acquisition of 4G spectrum for Rs 13,885 crore. BSNL has also presented a preliminary analysis from IIM Ahmedabad, which advises granting VRS (voluntary retirement plan) to roughly 35,000 employees at a cost of Rs 13,000 crore.
According to a corporate source, around 80,000 employees will benefit from the government’s VRS. BSNL employs 1.50 lakh people across the country.Meanwhile, the BSNL Employees’ Union is protesting the government’s VRS rollout, claiming that the government has not established clear mechanisms for resolving the concerns of employees who have opted for VRS.
What Is the Future of BSNL?
With 436.69 million members, Jio is now the most popular network operator, followed by Airtel (193.74 million), VI (121.41 million), and BSNL (16.67 million). The question is whether the Indian customer can rely only on private enterprises for something as important as the internet and a steady mobile connection. Despite its financial difficulties, the Modi government ordered BSNL to develop its own 4G network rather than working with a foreign vendor. While this may appear to be a poor option in the short term, BSNL will be the first operator in India to launch wholly domestic 4G and 5G networks. That would be a significant achievement.
On August 15, 2022, BSNL may offer 4G and 5G services. This is only the beginning. With BSNL’s launch of domestic 4G, Indian telecom equipment makers would gain industry experience and opportunities for innovation.Enterprises like Tcs (Tata consultancy services), who had no significant experience as a telecom vendor or delivering 4G radios, may now do so not only for BSNL but also for other telecommunications. Users won’t have to worry about their data slipping into the wrong hands with domestic 4G and 5G networks. This will ensure India’s future security and prevent any threats to the country’s mobile network.
What is the cause of BSNL’s decline?
Due to severe competition and a shortage of network capacity, the operator’s demise began around the same time. In fact, telecom analysts say that Reliance Jio, Airtel, and Vodafone-Idea, as well as strict laws, are wreaking havoc on BSNL’s finances.
What happened to BSNL?
After earning a profit for the first eight years of its operations, BSNL revealed its first loss in FY 2009-10 due to severe competition from commercial companies such as Airtel, Vodafone, and Idea.