UPA-era procurement delays kept us back – BSNL CMD

BSNL Chairman and Managing Director Anupam Shrivastava blamed delays in procuring key equipment for the present backward condition of the state-owned telecom operator.

The company, which was once profitable and dominated India’s telecom sector, has run up huge losses in the last several years, while private telecom companies have reaped tens of thousands of crores in profit during the same period.

BSNL reported a loss of Rs 3,803 cr for the year ended March 2016, taking its total loss to over Rs 47,000 cr. In the previous year, it had a net loss of Rs 8,234 cr. These losses have prompted many to call for the privatisation or shutting down of the company, which they see as incapable of competing in a liberalized economy.

However, Shrivasatava said the company was not able to compete with others due to equipment shortage.

“BSNL could not procure equipment from 2006 to 2012 and therefore (was) left behind. Now, the revival process is on, and for the last two years, we have come to EBITDA positive,” he added.

EBITDA positive means the company’s operations are making profit, but it is still in losses due to non-operating costs such as interest, tax, capital expenses and so on.

The turnaround of BSNL has been a priority for the Modi Government. This was a little surprising as the UPA government, led by the Congress Party, was supposed to be more in favor of socialism and state-owned enterprises, while the NDA government led by Narendra Modi was supposed to be more market-oriented.

The period of delays highlighted by Shrivastava — 2006-2012 — falls square in the middle of the UPA regime. The UPA, led by Sonia Gandhi, ruled from 2004 to 2014.

While a lack of political will can be blamed for the delays, another crucial reason was litigation. Unlike private companies, BSNL is bound by strict transparency rules that apply to its procurement.

It has to go through various processes such as request for proposal, tendering and finally the actual award. In between, any disgruntled vendor was free to throw a spanner in the works by approaching a court and obtaining a stay in the whole process.

The process was made all more contentious because BSNL has a habit of giving out big bang orders worth billions of dollars. This raised the competitive intensity and stakes for equipment vendors, who use all the tricks in the book to get at least a part of the final order.

Though BSNL was the first to roll-out 3G services, it was soon overtaken in terms of capacity by private competitors like Bharti Airtel and Vodafone. This affected its quality of service, and in turn led to exit of customers.

Lack of funds also meant that the company was not able to expand its fiber broadband business, or kick off its 4G services in a timely fashion. Unlike private companies who have built-out a pan-India 4G spectrum, BSNL is present in a handful of cities.