The Government of India has acknowledged that the BSNL and MTNL are currently in financial distress and that it wants to restore them to profitability. It has also announced that it plans to infuse Rs 39,458 crore of fresh investment over the next five years, communications minister Ravi Shankar Prasad said during the Rajya Sabha.
What’s interesting is that he also blamed the previous UPA government for the state of both telecom companies, stating that the previous UPA government did not provide required support to run the companies effectively.
According to a report by the Economics Times, BSNL’s market share of mobile connections has dipped to 10.95% by May 2014, from 14.87% in March 2009. While MTNL’s market share dipped to mere 4.87% from 10.87% during the same period.
During the financial year 2013 BSNL reported a loss of Rs 7,884, a fourth straight loss making fiscal for the company. On the other hand, MTNL reported a profit of Rs 9,600 crore for the quarter ended March 31, 2014, however, this was because the Indian government had decided to take over the liability for payment of pensionary benefit w.e.f 01.10.2000 as per the pattern of BSNL.
The new government’s plan to revive the state-owned telcos is noteworthy, however, just infusing money into a loss making company is not going to be enough. It’s worth noting that in April 2013, the previous government had set up a Group of Ministers (GoM) to recommend short, medium and long-term measures to revive BSNL and MTNL. Some of the recommendations have already been implemented.
What the new government needs to do is bring new management to handle the telcos. In July 2013, BSNL had appointed A N Rai as the interim Chairman and Managing Director, and MTNL has appointed P K Purwar as Chairman and Managing Director. However, these new appointments, albeit interim, are from within the organization. Hopefully when these telcos decide on the final appointments they are from outside the organization. These are the people who are going to bring new ideas and save the company. Just money alone won’t revive a company.