The government of India has asked the telecom service provider Bharat Sanchar Nigam Limited (BSNL) to choose between revival or shutdown considering its ever-increasing losses. In a meeting with the top BSNL officials, the government has asked the public company to present an analysis of all options available including shutting down.
The government-owned telecom company is facing fierce competition from private players. Especially, since the launch of cheap internet at 4G speeds, BSNL has lost market share considerably and is forced to think over a plan to counter these losses. The telecom operator may reduce the workforce either through a VRS or by bringing down the retirement age from 60 years to 58 years.
Media reports suggest that BSNL may layoff 50,000 employees out of its 1,74,312 workers by reducing the retirement age to 58. The average age of BSNL workforce is above 55 years which is considerably high in comparison to RIL’s and Airtel’s employee’ average age which is 30 years and 28 years respectively.
If BSNL lays off 50,000 employees, the telco will save around ₹13,895 crores over the next six years, a senior committee of DoT suggests. At the end of 2017-18, BSNL incurred losses of ₹31,287 crores. In the last three financial years, BSNL’s losses increased. The telco accumulated losses of ₹27,818 crores in 2017-18 and ₹32,411 crores in 2015-16.
BSNL contributes about 25 per cent alone in total losses of Public Service Undertakings. To counter the losses, the firm is also planning to monetize land-bank and building holdings which are estimated to be worth ₹15,000 crores. Moreover, BSNL has received an interim report of a three-member committee with the turnaround of the losses.
According to a TRAI report, telecom operators like BSNL, Bharti Airtel, Vodafone Idea and others have witnessed downfalls in customers bases except for Reliance Jio. Idea lost the most with Vodafone second in line. Both of the firms together lost 66 lakh (6.6 million) mobile customers due to excellent service and cheap internet from Jio.
Bharti Airtel lost 23 lakhs (2.3 million) mobile customers followed by Tata and BSNL. Tata lost 10 lakh (1 million) customers while BSNL lost 5 lakh (500K) customers after the launch of Realicne Jio. As of September 2018, BSNL has only 9 per cent of the market share in the mobile and wireless space while Vodafone Idea has 37 per cent market share. Airtel stands at 29 per cent and Jio stands at 21 per cent.