State-run telecom operator Bharat Sanchar Nigam Limited (BSNL), in its annual report for FY23, has said that the operational environment continues to be challenging for the company. BSNL has reported a decline in revenues due to decreasing tariffs for telecom services, despite provisioning more connections.
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Revenue Decline Amid Falling Tariffs
BSNL said it is striving to boost the Average Revenue per User (ARPU) by offering innovative value-added services to its customers, both on wireline and wireless networks. This is in contrast to its private industry rivals who increased tariffs in November 2021 to grow their ARPU. The Highest ARPU in the Industry is of Bharti Airtel which stands at Rs 200.
"The tariffs for telecom services are going down day by day. Consequently, revenues are dropping in spite of provision of large number of new connections. BSNL is trying to increase the Average Revenue per User (ARPU) by providing innovative value added services to its customers both on wire line and wireless network. In order to increase its revenue, BSNL has taken several new initiatives like Infrastructure Sharing, Commercial Utilization of Fixed Assets, Exploring International Business, Enterprise Business and Fixed Mobile Convergence," BSNL said in its annual report for FY23.
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Financial Performance
In terms of financial performance, BSNL noted an increase in revenues from mobile, FTTH, and enterprise business, while revenues in landline and broadband have decreased. Operating and administration expenses have increased from Rs 9,499 Cr to Rs 9,834, and the company incurred a loss of Rs 8,161.56 Crores for the year 2022-23. Despite these challenges, the company's EBITDA turned positive at Rs 1,558.79 Crores.
"Increase in income from Operations by 14 percent. The operational environment continues to remain challenging. During the year 2022-23, the Company incurred a loss of Rs 8161.56 Crores (Previous year Rs 6981.62 Crores). The Income from Services is Rs 19127. 79 Crores (Previous year Rs 16809.22 Crores), the Other Income is Rs 1571.11 Crores (Previous Year Rs 2243.7 Crores). The Company is EBITDA positive during this Financial Year to Rs. 1558.79 Crores. (Previous Year 944 Crores)," BSNL added.
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BSNL has faced financial difficulties, mainly due to the absence of widespread 4G services, while its competitors, such as Jio and Airtel, are moving towards faster 5G network rollouts. The company highlighted the rapid technological changes in the industry, making it vulnerable to high capital costs and dynamic competition.
Revival Package
As reported by TelecomTalk, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved a revival package for BSNL with an outlay of Rs 89,047 crore, which includes the allocation of 4G/5G spectrum and an increase in the authorized capital of BSNL from Rs. 1,50,000 crore to Rs. 2,10,000 crore. Despite the challenges, BSNL has reported revenue growth in certain segments and aims to improve its financial position.
Also Read: BSNL’s Rs 89,047 Crore Revival Package Approved by Cabinet, Includes 4G/5G Spectrum Allocation
"Very fast technological obsolescence and rapid introduction of new technology platforms by competitors makes the sector vulnerable to high capital cost exposure dynamic changes in competition level especially in services like data, VAS, contents etc. compel BSNL to offer matching tariff in broadband and FTTH services (ignoring the cost factor and margin) to remain competitive, relevance in the market / service and to maintain existing customer base. There is a scenario of getting mobile communication cheaper affecting fixed access communication business," said BSNL in its annual report.
