Can BSNL revival package save the ailing telecom major?
Govt allotted Rs1.64 lakh cr to BSNL for each of the chosen focus areas including 4G spectrum purchase, upgrade of service and for de-stressing its balance sheet
Government has recently announced a revival package of Rs1.64 lakh crore to BSNL. Acknowledging the BSNL's crucial role in the provision of telecom services in rural areas, implementation of indigenous telecom technology and carrying out disaster relief, following the government policy of retaining PSU in a strategic sector like telecom and to have fair competition in telecom market this financial relief is provided by the government. An analysis of this package is as follows:
1. For the purchase of 4G spectrum, Rs 44,933 crores will be given to BSNL. Rs 22,471 crores will be given for meeting 4G capex requirements. In the implementation of 4G technology, there is no level playing ground between BSNL and other TSPs. BSNL 4G service, based on indegenous technology, has to compete with the other TSPs 4G service with proven imported technology. Time only will tell whether the QOS of BSNL's 4G service will be on par with that of others. Though it is a tall order, BSNL is second to none and let us hope that BSNL 4G will come out with flying colours in this challenge!
Because of security concerns (which have become highly critical of late), central government organisations and armed forces will definitely subscribe/migrate to BSNL 4G service, when it is available. It is expected that like the 2G/3G tariff, BSNL 4G tariff will also be very competitive. If the QOS of BSNL service is on par with that of other TSPs, it is hoped that BSNL, with its vigorous marketing efforts and attractive tariff, can get new 4G customers and also can get 4G customers from other TSPs through MNP/Ghar wapsi scheme. 'Athmanirbharatha' is a lofty idea and should be encouraged but normal customers may not prefer BSNL 4G service just because its 4G equipment is indigenous but will choose the 4G service provider based on QOS as customers have become quite quality conscious.
On August 15, 2022, BSNL 4G services will be launched by PM. It will be a moment of pride to India in general and BSNL in particular as India will be joining the elite club of four nations who have provided 4G services with indigenous technology and BSNL will be the first operator in India to provide 4G service based on indigenous technology.
BSNL will get Rs 26,316 crores from the government for extending 4G services to 25,000 villages. Customer acquisition will not be an issue here for BSNL as there will be no competition. BSNL should have tie up with 4G phone vendors and offer a combo package of 4G smartphone along with 4G connection. Many rural customers will have only feature phones with them and such combo packages will help BSNL in faster customer acquisition in these villages. As ARPU (Average Revenue per User) is less in villages, not much revenue can be expected in return by BSNL from these rural areas.
BSNL will extend 4G services to more than 1,20,000 sites and BSNL may take about 1.5 years for rolling out the services fully. By that time private TSPs would be well entrenched in 4G and would have rolled out 5G services.
BSNL should leapfrog from 4G technology to 6G as 5G technology is transitioning from 4G to 6G. BSNL should be 'generation ahead' of other TSPs in launching 6G service.
2. Viability gap funding of Rs 13,789 crores for rural wireline operations is a welcome measure. This will help BSNL to play a vital role in meeting the government objective of providing broadband connectivity to every Gram Panchayat.
3. Conversion of AGR dues to equity-Private TSPs (other than JIO) also received such relief from the government.
4. Sovereign guarantee backed long term bonds- Rs 40,399 crores. BSNL has to pay the entire amount on maturity.
5. Merger of BBNL with BSNL is a welcome move and is in tune with the government policy of reducing the number of PSUs. This merger will help BSNL to commercially exploit the fiber resources created by BBNL to the maximum extent. BSNL already has a well laid fiber network even in rural areas and merger of BBNL with BSNL will further strengthen BSNL in this regard. The infrastructure created by BBNL will be maintained properly by BSNL with its vast experience in this field. The fiber resources created by BBNL can be leased out by BSNL to other TSPs for the fiberisation of 5G towers in rural areas. BSNL can also utilise the fibre network of BBNL for the fiberisation of 4G towers in rural areas for providing the quality 4G service. As per PMs announcement on August, 15, 2020, six lakh villages will be provided with OF connectivity within 1000 days. BSNL can play a vital role in this ambitious plan by utilising the fiber network laid by not only BSNL but also BBNL.
6. For the already implemented Voluntary Retirement Scheme (VRS), Rs 17,160 crores will be funded by the government and another Rs 12,768 crores towards retirement liability.
7. BSNL should take a first mover advantage by venturing into In-Flight Wi-Fi service (using BTSs and satellite) for which it has already acquired a licence. This service has a lot of revenue potential. But surprisingly no capex is allotted for this service. Similarly for providing satellite based broadband service (by leasing satellite bandwidth from LEO satellite operators) funds should have been allotted to BSNL. BSNL has wide experience in the satellite field and also has infrastructure. Three-quarters of rural India does not have access to broadband service as many locations are still without cellular/fiber connectivity and satellite medium is only the viable option there for providing broadband service.
Government will sign an agreement with BSNL stipulating targets for revenue and customer acquisition. Such an agreement will make BSNL accountable for the funding given by the government and also it will facilitate competition in the market. Government expects BSNL to deliver quantitatively/ qualitatively. Revenue will be the most important quantitative deliverable. On the qualitative side, it will be behaviour towards customers.
BSNL should fiberise the towers and make high bandwidth backhaul ready by the time 4G services are started. Recently the E band was also made available by the government for use as backhaul. To get full advantage of 4G service, high bandwidth backhaul is necessary. BSNL should gainfully utilise the time available with it for backhaul upgradation.
Government has allotted funds to BSNL for each of the chosen focus areas including 4G spectrum purchase, upgradation of service and for de-stressing its balance sheet. Hope in turn BSNL will rise to the occasion and meet the expectations of government and customers by providing quality services and increasing the revenue.
(The author is a former Advisor, Department of Telecommunications (DoT), Government of India)