labels: interviews, profiles
Baffled behemoth news
Venkatachari Jagannathan
17 June 2002

Chennai: Bharat Sanchar Nigam Ltd (BSNL) chairman and managing director Prithipal Singh and his team never played a game called competition, forget winning it. And, now, when private players not just play that sport but play it dirty, they are so baffled that they forget to even cry foul.

It's not just undercutting that Singh, an electrical engineering graduate, has to contend with, but also under-the-ground cable-cutting. Recently, BSNL-Chennai officials found 1,200 lines burnt in the Chamiers Road area, an upmarket commercial and residential district, and lines to a residential complex cut with blades.

While digging roads, damages are quite common. But at Chamiers Road a router was damaged and the cables were burnt, proving sabotage. The needle of suspicion, says a BSNL official, points towards competition. Not just that. State government officials, on their part, do not allow BSNL, formerly department of telecommunications, to expand its network by laying cables along the roads.

To make things worse, Chennai's roads have been potholed by three private basic-service providers - Bharti Telnet, Reliance Infocom and Tata Teleservices - and Bharti Telnet has commenced its operations recently. Even in Kerala, where supposedly anti-bourgeois communists rule the roost, the public sector BSNL was denied permission to lay cables, while a private player gleefully ploughed the city roads.

Singh, while questioning the need for competition, with the private players connecting just 7-8 lakh lines as against BSNL's 3.5 crore lines, says: "Even if the customer-access code system comes into effect, the additional features and services we will be introducing will keep our subscribers loyal to us."

But just that doesn't make Singh complacent. He has drawn up investment programmes to the tune of Rs 14,000 crore and is charting out plans for BSNL to foray into new areas like mobile and Internet telephony, video-on-demand, broadband connectivity, call centres and others.

He also wants the Rs 24,000-crore-revenue BSNL to effectively venture into the retail market by opening tele-shoppes, assuring phone connections in three days in major markets. BSNL also plans to increase its Internet subscription to 5 lakh this year from the current base of 2.5 lakh. As a social commitment, BSNL-Chennai has instituted an award of Rs 1,000 to assist pursuit of further education to meritorious students in 25 municipal and corporation schools.

"We hope to close this fiscal with a turnover of Rs 40,000 crore," a confident Singh tells domain-b. Excerpts from the interview:

Is BSNL planning to get into entertainment or television cable operation activity?
We are entering the home entertainment segment, but not as a cable operator. We want to exploit the full potential of our existing infrastructure that goes into subscriber premises. Our copper cable pair at the subscriber-end, apart from carrying voice traffic, can be used to offer other services like video and broadband Internet connectivity. And we want to tap this potential. We are in talks with Prasar Bharathi and a couple of other content providers. Our role is restricted to offering our infrastructure for content providers to beam their signals in urban and rural areas in exchange for a carriage fee.

Can you throw some light on the investment plan of BSNL this year and its financing pattern?
BSNL will be investing around Rs 14,000 crore this fiscal; last year it was Rs 17,000 crore. The fresh investment will be in offering Internet telephony (to be launched next month) mobile telephony network (Rs 2,000 crore), fixed lines, wireless-in-local-loop (WLL/limited mobility), installation of transmission equipment, laying of optic fibre and local cable, network management systems, setting up call centres and others.

This year we will install 18,000 village panchayat telephones (VPT) in addition to the 70,000 fixed last year. This was done with WLL technology and for inaccessible areas we will be using satellite terminals. The private players have to connect 50,000 lines. We plan to give 64 lakh connections this year, of which 10 lakh will be on WLL and 2.5 lakh will be mobile. As per the current plans, the entire capex will be met out by internal accruals. We may think about borrowings only in the third quarter of this fiscal.

BSNL has been talking about unveiling mobile phone services in Chennai and other cities for the last two years, but nothing has materialised so far. When will BSNL finally come out with the cell-phone service?
The necessary equipment have been ordered and the service will be rolled out tentatively in three-to-four months. Validation of the equipment is being done now. As regards mobile service in Chennai, initially we thought of having a pilot project in the city along with Kolkata. Since that project is facing some problems we have decided to shift Chennai to our national mobile phone service rollout plans.

What about BSNL restructuring and outsourcing ideas?
We had plans to restructure the corporation on strategic business units (SBU) - basic services, value additions and long-distance telephony. But the plan is currently put on hold as technology is fast changing. We intend to wait till everything settles down. Our employee strength is 3.5 lakh and we don't have plans to introduce any voluntary retirement scheme. Currently the staff ratio is 12 per every 1,000 lines and we would like to bring down that to eight by increasing business.

We will outsource value-added services like call centres, video on demand and others. Call centres and other assistance centres will help in increasing call completion rates so that we don't lose any revenue. We plan to have at least one call centre in each state and later link it up at the national level.

BSNL has a huge outstanding position. What plans have to taken to speed up the collections?
Our total outstanding is around Rs 3,000 crore and this is a questionable number. Not all are bad and quite a sizeable are still recoverable. We have to redefine what constitutes an outstanding bill. It is the middle-level segment that is defaulting, not the top-level (corporate and high net-worth individuals) and low-level segments, which just pay the rentals and the usage is limited to free calls.

Twenty-five per cent of our revenue is generated from high-end customers, with the middle- and low-level contributing 70 per cent and 5 per cent, respectively. It is the middle segment which is showing growth, and we have separate strategies to target this segment.

On interconnect agreements for international long-distance (ILD) and national long-distance (NLD) calls…
We have signed interconnect agreement for ILD with Bharti and Data Access, and NLD with Bharti. As soon as they get the security clearances we will commence business.


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