Is BSNL in Revamp Mode?

12:55 PM Evidence suggests the Indian state-owned carrier might be acting on external advice

March 15, 2010

2 Min Read
Is BSNL in Revamp Mode?

12:55 PM -- Bharat Sanchar Nigam Ltd. (BSNL) appears to be acting on some of the recommendations made recently by the committee headed by Sam Pitroda, adviser on public information, infrastructure, and innovation to India’s Prime Minister.

First, the operator revamped its GSM expansion equipment tender plans, as suggested in Pitroda's report. (See BSNL Scraps Monster Mobile Tender and Love Me Tender.)

And now, again in line with Pitroda's recommendations, it has decided not to proceed with its bid to buy a 75 percent stake in African operator Zamtel Telecommunications Company Ltd. , Zambia's fixed-line incumbent that also commands a small mobile market share. (See AsiaWatch: Indian Telcos Look to Africa and Four Bid to Buy Zamtel.)

Instead, BSNL will focus its attentions on domestic issues, especially its finances, rather than international expansion. (See IPO Not the Cure for BSNL's Ills.)

While African operators offer growth potential -- something that has attracted other Indian operators looking to diversify their asset bases -- Zamtel currently makes a loss on its annual revenues of about $100 million, and BSNL doesn't need any further pressure on its balance sheet and bottom line as it is struggling to keep itself profitable. (See Reliance Dreams of Africa and Bharti's African Odyssey.)

These moves suggest BSNL might be making an effort to revive its fortunes and address the competitive issues it faces in India, but it has a long way to go before it can be as efficient as many of its main rivals.

So the question now is whether BSNL will adopt any further recommendations, such as the outsourcing of the carrier's IT and other non-core functions, a headcount reduction of around a third of its 300,000 staff (a suggestion the main workers' union is contesting), and the sale of a 30 percent stake in the company. Taking those steps would truly create a new BSNL.

— Gagandeep Kaur, India Editor, Light Reading

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