This announcement was made by Kapil Sibal, the Minister of Communications and Information Technology, in response to a question in the Lok Sabha. Sibal also mentioned that the telco has reported a total loss of Rs 6,536 crore for the same nine-month period.
While BSNL hadn’t disclosed its revenues for the corresponding nine month period last year, Milind Deora, the Minister of State for Communications and Information Technology, had informed Rajya Sabha in September 2012, that BSNL had registered total revenue of Rs 27,933.50 crore for the financial year 2011-2012 (FY-12), registering a 3.3% decline from Rs 28,876 crore revenue for the financial year 2010-2011 (FY-11).
He had also mentioned that the telco had reported a total loss of Rs 8,851 crore for FY-12, a significant 38.64% increase from Rs 6,384 crore loss in FY-11.
The minister said that BSNL currently has 13.51% market share in the country for the nine month period ending December 31, 2012, up from 12.7% market share as of March 31, 2012, but down from 13.83% market share as of March 31, 2011 and 15.66% market share as of March 31, 2010.
The other state run telecom service provider Mahanagar Telephone Nigam Limited (MTNL) has 11.3% market share in the country, for the nine month period ending December 31, 2012, up from 11% market share as of March 31, 2012 and 11.29% market share as of March 31, 2011, but down from 14.21% market share as of March 31, 2010.
Along with BSNL revenues, Sibal also said that MTNL has reported net loss of total revenue of Rs 2,685 crore and net loss of Rs 3,335 crore for the nine month period ending December 31, 2012. Last month, the company had reported operational revenue of Rs 835.02 crore and loss of Rs 1182.1 crore for the quarter ending December 31, 2012.
Financial Status of BSNL
Earlier this month, Dr Killi Kruparani, Minister of State for Communications and Information Technology had informed the Lok Sabha that BSNL had registered a steep 95.8% decline in its cash reserves in the past two years, with the cash reserves currently standing at Rs 1,214.44 crore for the financial year 2011-12, down from Rs 29,355.5 crore registered in the financial year 2009-10.
Deora had also informed in September 2012, that BSNL had been continuously recording a significant reduction in its profits since 2004-05 (FY-05), where it had posted a total profit of Rs 10,183 crore. In subsequent years, the company recorded profits of Rs 8,940 crore (FY-06), Rs 7,806 crore (FY-07), Rs 3,009 crore (FY-08), and Rs 575 crore (FY-09) respectively. BSNL reported its first loss in FY-10 when it reported a loss of 1,823 crore for the fiscal and in subsequent years, the losses have significantly increased to Rs 6,384 crore in FY-11 and Rs 8,851 crore in FY-12.
Reasons for rising losses
Sibal attributed BSNL’s rising losses to the decline in the company’s revenue and an increase in its expenditure. He said that BSNL revenues has declined over the years due to:
– Fixed to Mobile substitution: The tendency of subscribers to replace their landline telephones with mobile phones.
– Stiff competition in the mobile sector, the payment of 3G and BWA spectrum charges and a decrease in the average revenue per user (ARPU) in the mobile sector. The minister however didn’t reveal any information on the current ARPU of BSNL.
– Increasing expenditure due to salaries of a large legacy work force.
Steps Taken to Improve The Profitability
Sibal mentioned that Department of Telecommunications (DoT) and BSNL senior management reviews the performance of BSNL regularly and has taken several steps to improve the profitability of the telco. These include:
– Introducing new Value Added Services including broadband services, Intelligent Network services and broadband based value added services like Video, Games and Music on demand among others. Note that BSNL already offers a music, video and games on demand service in partnership with Hungama. It also offers a Games on Demand service with Disney’s Indiagames.
– Strengthening BSNL’s sales and distribution system and conducting special consumer retention camps.
– Improving its marketing strategies and introducing new tariff plans for its service.
– Monitoring its Quality of Service (QoS) parameters to comply with the benchmarks stipulated by Telecom Regulatory Authority of India (TRAI).