IIM-A OUTLINES CARROTS & STICKS FOR BSNL
IIM-Ahmedabad has recommended a set of tough, sweeping changes in the working of BSNL and a helping hand from the government to revive the lossridden telecom PSU. In an interim report presented to the telecom ministry, the premier management institute has also suggested measures like immediate allocation of 4G spectrum to BSNL, selling real estates after duly transferring them to the PSU from the telecom department, operationalisation of the tower arm and introduction of a voluntary retirement scheme (VRS).
The government, the report said, should think of listing BSNL after its financial parameters improve and urgently reform its board by linking capital infusion to timebound performancebased achievements and review the efficacy of BSNL management decisions and make the board more accountable for failures and bad decisions.
The report strongly recommended allocation of 4G spectrum to BSNL immediately though it has large chunks of 900 MHz of spectrum that can be used for 4G, but the same has not been administered for 4G use. The report does not foresee sustainability of BSNL without it getting 4G spectrum. The market shares and financial health of BSNL is very poor and any further loss of markets hare due to non-allocation of 4G would make the telco’s survival impossible. Non-allocation may de facto make BSNL defunct in mobile services in the next few years, it pointed out.
It also said the DoT should work closely with BSNL to identify all lands and buildings that have not yet been transferred to BSNL. Though the land valuation done so far pegs a value of Rs 6,000 crore (may be Rs 7,000-8,000 crore at most), the land and real estate not required by the telco must be monetised within six months, the report said.
IMM-A also recommends acceleration of the operation of BSNL Tower Corporation (BTCL), which has so far not been fully functional, as BSNL has not transferred all the 80,000 towers to it. This must be done urgently to avoid the 8 per cent revenue share paid by BSNL to the government, since as a infrastructure company BTCL will not be subject to the revenue share.
With fibre becoming the latest golden goose, the report asks BSNL to carve out a separate fibre unit as ‘fibre infrastructure division’ as part of the BTCL and it should take care of the broadband and optical fibre projects, including the FTTH, or Fibre-to-theHome and smart TVs to avoid revenue share loss.
There has to be a move to remove market and financial inefficiency. Bharat Sanchar Nigam (BSNL) is 100 per cent government entity. In order to infuse capital and bring in market/financial efficiency, it may be important to think about listing BSNL on the stock exchange like other PSUs such as ONGC, GAIL,NTPC, the report, which was submitted to the DoT last week, stated. The DoT had mandated IIM-A to suggest revival mechanisms for the incipient PSU. BSNL is likely to incur a loss of Rs 8,000 crore or above for fiscal 2018, doubling from the previous fiscal.
The report also asked the BSNL board to be held responsible for losses and bad business decisions and remove the fixed tenure of the chairman-cummanaging director. The CMD should not be chosen from the government service, the report said. “The top leadership of BSNL should be evaluated by DoT and should be made accountable for the profits and health of the organization,” the report said.
The report also called for wide reforms in the BSNL leadership and the composition of the board of directors. “The board of directors should also include professionals who have had experience of running large businesses. The board should not have only civil servants and academicians as independent directors who have not been associated with running of business. Also, the top managerial positions should not be left vacant for a period of more than three months,” it said. The report calls for implementing a performance-driven culture.