Telecom minister Ravi Shankar Prasad is cracking the whip on ailing telcos MTNL and BSNL. The minister has made it clear that companies must either perform or perish. CNBC-TV18's Malvika Jain and Elan Dutta spoke to industry experts to explore various opportunities the two companies could tap to script a turnaround. Revitalising the operations of state-run BSNL and MTNL, which have been making losses for eight consecutive years, is a priority area for the new government. However, telecom minister Prasad has made it clear that no bailout package will be provided. He wants the companies to focus on improving efficiency and market share.
During 2012-13, with a combined market share of around 14 percent, BSNL's losses stood at Rs 8,198 crore and MTNL recorded a net loss of Rs 5,321.12 crore. Experts say effective utilisation of assets such as land, tower infrastructure, spectrum and rural network could help turn around both ailing telcos. According to R Chandrashekhar, former secretary, telecom ministry: “Spectrum sharing and trading once they come into effect would provide a window of opportunity for monetising these assets, especially 3G and BWA spectrum which has more than 15 years of its period still left. There are also some very large projects in the government like NOFN, National Knowledge Network which collectively are of over 15-16 thousand crore also are available and there are no organisations that can compete with BSNL and MTNL and its spread across the country.” The idea of merging BSNL and MTNL has also been floated but has met with stiff resistance from the BSNL union and industry watchers believe a merger is ill conceived at this stage. Jaideep Ghosh, Partner, KPMG says: “Merging these two entities with huge losses at this point in time, with people issues and other synergies and alliances issues both would have to be tackled which I do not feel is easy.” Chandrashekhar adds: “There is also a need to bring in certain amount of equity and managerial capability into the organisation which could help to hone its commercial operations. The other point I wanted to mention is that there is also an opportunity for BSNL and MTNL which actually have non-overlapping territories.. MTNL operates only in Mumbai and Delhi, BSNL in the rest of the country.... to synergise their operations, if not to actually merge them.”
Even DoT's proposal to hive off tower assets of BSNL continues to be in a limbo and await a political call.
During 2012-13, with a combined market share of around 14 percent, BSNL's losses stood at Rs 8,198 crore and MTNL recorded a net loss of Rs 5,321.12 crore. Experts say effective utilisation of assets such as land, tower infrastructure, spectrum and rural network could help turn around both ailing telcos. According to R Chandrashekhar, former secretary, telecom ministry: “Spectrum sharing and trading once they come into effect would provide a window of opportunity for monetising these assets, especially 3G and BWA spectrum which has more than 15 years of its period still left. There are also some very large projects in the government like NOFN, National Knowledge Network which collectively are of over 15-16 thousand crore also are available and there are no organisations that can compete with BSNL and MTNL and its spread across the country.” The idea of merging BSNL and MTNL has also been floated but has met with stiff resistance from the BSNL union and industry watchers believe a merger is ill conceived at this stage. Jaideep Ghosh, Partner, KPMG says: “Merging these two entities with huge losses at this point in time, with people issues and other synergies and alliances issues both would have to be tackled which I do not feel is easy.” Chandrashekhar adds: “There is also a need to bring in certain amount of equity and managerial capability into the organisation which could help to hone its commercial operations. The other point I wanted to mention is that there is also an opportunity for BSNL and MTNL which actually have non-overlapping territories.. MTNL operates only in Mumbai and Delhi, BSNL in the rest of the country.... to synergise their operations, if not to actually merge them.”
Even DoT's proposal to hive off tower assets of BSNL continues to be in a limbo and await a political call.