BSNL’s growth in income and ability to contain expenditure in salary, administrative, employee remuneration and other benefits, helped in turning EBITDA positive in 2020-2021. Put simply, Earnings before Interest, Taxes, Depreciation and Amortisation or EBITDA is a measure of a company's operational performance.
• Government of India was committed to revive BSNL for public service and fairness and granted package to support the PSU, called for a lot of discussions and debates in both houses of the Parliament.
• Now within a year of revival plan, the State-owned undertakings Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) have turned EBITDA positive in first 6 months of this financial year.
• While for BSNL, EBITDA rose from minus Rs. 3596 crores for half year ended in September, 2019 to positive Rs. 602 crores, for MTNL the corresponding figures were minus Rs. 549 crores in September, 2019, and the current figure, positive Rs. 276 crores.
• According to Department of Telecommunications (DoT) sources, both organizations are expected to reduce their losses by 50% when compared to 2019-20.
• The reasons for better performance include a sharp reduction in wage bill due to Voluntary Retirement Scheme (VRS) (nearly 50% workforce of BSNL and 75% of MTNL was reduced).
• It said that overall 92,956 employees of both the PSUs who opted for VRS have retired on January 31, 2020.
• The salary expenditure in BSNL and MTNL has reduced by around 50 per cent (about ₹600 crore per month) and 75 per cent (about ₹140 crore per month), respectively.
• Equally important, BSNL was able to maintain their revenue and cut down on other costs.
• BSNL is also rapidly expanding its Fiber-To-The Home (FTTH) connections and the progress is being closely monitored by DoT.
• In the mobile segment, market share has increased to 10.36% in October, 2020 as per figures published by TRAI.
• BSNL added over 10 million new customers during this financial year in mobile segment.
• Earlier, Union Cabinet had approved the revival package for BSNL/ MTNL in October, 2019 which, inter-alia, included VRS, support for 4G spectrum, monetization of core and non-core assets, Sovereign Guarantee for Bonds to be raised by the PSUs and merger of MTNL and BSNL in the short run.
• BSNL and MTNL have very successfully raised money from the bond route.
• Further, sovereign guarantee of ₹15,000 crore has been extended to BSNL/MTNL. They have raised funds from market to restructure existing high-cost debt.
• According to DoT sources MTNL/ BSNL have been able to monetize core and non-core assets totaling Rs.1830 crores in 2019-20. This figure is expected to be in excess of Rs. 3000 crores in the current year.
• BSNL is monetising its tower assets by leasing out its towers. It earned Rs. 1018 Cr. in the previous year and has planned to securitize the earnings from tower rentals.
• BSNL towers have unique preposition of fiber connection in more than 70% which make them highly attractive for Telecom Service Providers. It has leased out 2 lac kilometres of OFC at the rate of Rs. 18000 per Km. per year earning a revenue of Rs. 360 Cr
• It will be recalled that the Indian mobile communication market now has only 4 players of which 3 are in the private sector and the fourth is the BSNL/MTNL combine.
• In the wireline or land line segment, BSNL/MTNL still has about 50% of the share with considerable network across the country. The PSUs are hopeful of leveraging this strength by offering the services on fiber and linking this with FTTH connections.
(The author is a trainer for Civil Services aspirants. The views expressed here are personal.)