IIM-A OUT­LINES CAR­ROTS & STICKS FOR BSNL

Financial Chronicle - - FRONT PAGE - AN­JANA DAS

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.

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