Subscribe

0

Telecom Services V&D 100

BSNL - 2  : The Dis-connect

author-image
Voice&Data Bureau
New Update

BSNL's telecom services revenue nosedived by 14% during the last fiscal. Its
revenue declined to Rs 30,240 crore in FY 2009-10 from Rs 35,167 crore in the
previous fiscal. Tariff wars and competition affected its revenue growth.

Advertisment

With a colossus market share of 71.8% in fixed line business (its main
revenue contributor), the company is still facing tough times. This year, the
company has ambitious plans to embark on a new journey of development by keeping
broadband at the epicenter of its policies. Keeping in view the fact that
broadband has shown an impressive growth of 33% in the last fiscal, the company
seems geared to cash on the untapped market.

A plethora of challenges were faced by the company this year. Tariff war,
which got ensued this year and managed to cause considerable disruption in
operators' revenue, also affected BSNL.

The company made attempts to renovate its marketing strategy. It tied up with
various mobile stores. Also, a manpower of 10,000 sales people were recruited,
especially for this purpose.

Advertisment

On the 3G front, the company also made some successful strides by spreading
its services to 430 cities. Few services from the company like high-speed
Internet access, mobile TV have been helpful in the driving some meaningful
subscriber addition. Its 3G ARPU is 40% higher than its 2G ARPU.

BSNL - 2
Highlights
  • To expand 3G services in 760 cities across the country in 2010-11
  • Targeting 16 mn broadband users by March 2014
  • Broadband using DSL, EVDO, WiMax, etc, will be the focus area
  • Due to 3G spectrum fee payment, it will reduce capex

On the broadband front, the company has plans to add 3 mn subscribers. The
company also commands a major chunk from the existing 8.5 mn subscribers from
all across the country. With the support of DIT, the company has rolled out its
broadband services in 1,000 blocks. BSNL has specific plans to focus on WiMax
for rural areas, 3G for urban areas, and EVDO for cities in a limited way.

Advertisment

The company has its share of lows as well. The telecom ministry turned down
the demand by the state-run company for refund of payments made towards spectrum
fee for 3G telecom services.

On the capex side, the company had planned for Rs 14,800 crore. In the wake
of the 3G spectrum pay out, BSNL will review its capex. The company has a huge
manpower to manage and more than 50% of its expenditure goes into the salaries
that are paid to the large number of employees.

Broadband will be our main focus area

CMD , BSNL, Kuldeep Goyal
What were the key challenges in the
last fiscal ?

There were many challenges in the last year. The biggest being the
tariff war that ensued which actually lowered the revenues of the operators.
It had a multi-dimensional impact as it posed a number of challenges. The
tariff rates brought a paradigm shift in the industry.

Also, there has
been an impressive growth in the broadband segment. It has shown a
spectacular rise of 33%. On the broadband front, we have got 5.5 mn
connections out of the 8.5 mn existent connections. On the wireless
broadband side, 3G, 2G, EVDO, and WiMax will be helping us in increasing the
number of customers. There has been a reduction in the mobile revenues.


What kind of subscriber growth did the PSU have in the last fiscal?

The services that we started for 3G have given us a good response. They
were spread across 430 cities. We have 1.3 mn 3G services.

We also added 4-5 lakh MTNL connections roughly. We are seeing 3G as a
big opportunity that we can leverage on. 3G will improve voice and data.
This will further strengthen the industry. There are a few services that
have become quite popular among the subscribers like full stream video
download, mobile TV, and high speed Internet access. These services, apart
from catapulting the revenues, are also popularizing 3G.

Also, our 3G ARPUs are improving. They are 40% higher as compared to 2G.
We have various plans to deploy BWA. For the rural section, we have already
rolled out our services with the support of DIT. On the urban side, we have
800 base transmission systems.

What are your views regarding the migration to LTE?

In my opinion, the technology will have a natural migration to LTE.

As of now, the company has a clear-cut focus. Providing the best quality
of services is going to be our main area of concentration. We will focus on
WiMax for rural areas, 3G for urban areas, EVDO for cities in a limited way.

Also, the company has plans for promoting FTTH, which we are planning to
deploy in hundred cities. It includes enterprises as well.

What is the company doing to improve its market position and revenues?

We started the SWOT analysis in December, 2008 . Now, we are working
with a vision and a mission. We created four new verticals-fixed lines,
mobiles, new businesses, and enterprises.

We have focused manpower which will take care of all the niche segments.
Also, BSNL is focusing a lot on its marketing strategy. 10,000 people were
especially recruited to serve this purpose.

BSNL also introduced some specific IT tools like 'Sanchar Soft'. We held
a retail chain survey in which we discovered that 3.5 lakh shops out of 10
lakh sell BSNL products. On the new business side, we have signed agreements
with almost all the service providers and infrastructure providers. The
company has serious plans to monetize the towers and reduce opex. We also
signed an agreement to share 8,000 towers as well as fibers and bandwidth.
Also, we want to play a pivotal role in shaping the country's telecom
development.
Advertisment

VAS also has been able to help the company in making good revenues, with 20%
of the total revenue coming from it. It has been able to compete in this space
with other operators. In an attempt to boost the fixed line growth, various
tariff plans for mobile phones have been introduced by the company. Also, a
special effort is given in enhancing the customer care services. The company
also carried out a survey for the retail chains. Out of 10 lakh retail shops, it
was found that only 3.5 lakhs were serving BSNL products. BSNL has also tied up
with major service providers for infrastructure sharing, which will help it
monetize the towers and also to reduce opex.

The coming times seem quite challenging with private players entering the 3G
services space. Hopefully, BSNL will be able to evolve better and bigger under
the stringent competition.

The current fiscal also seems to be loaded with many challenges. After the
first mover advantage, that the telco got for 3G services, now it has to face
the fierce competition from private players in 3G services.

Advertisment

BSNL's success will depend on its overall marketing strategies. BSNL, which
is carrying the PSU tag, is still unable to compete with private players. The
organizational strategies chalked out Boston Consulting Group are yet to find
rewards.

If the company is able to cut down the manpower, it will be able to improve
profitability. 3G and WiMax roll outs will give BSNL the edge in rural areas.