Gopal Das has been appointed the Chairman and Managing Director of BSNL, the largest wireline service provider in India, and the fourth largest wireless telecom operator in the India with 71.68 million subscribers. Das was previously Chief General Manager, (Wireless Services) in Mahanagar Telephone Nigam Limited at Mumbai. The choice of Das at the helm of BSNL is rather interesting given the following reasons:

– A merger between BSNL and MTNL, both government owned entities, has been on the back-burner for quite a while, and Das has worked with both BSNL and MTNL.
– BSNL’s biggest challenge in recent times has been its striking employees which don’t want the company to be publicly listed, while the Government is looking to divest. Das had previously been Director of Human Resource Development at BSNL, and during his tenure, BSNL a massive corporate restructuring, which outgoing CMD Kuleep Goyal initiated.

Note: We see a public listing of BSNL as a means to price-discovery for defining a share swap ratio for a merger with MTNL. MTNL doesn’t have scale or pace, but operates in two of India’s richest mobile circles – Mumbai and Delhi.

The State of BSNL

BSNL’s star has been on the wane: it was once the third largest wireless operator in India, and now with 71.68 million connections and a low rate of growth (1 million; seven telecom operators added more connections than BSNL in June 2010) it is likely to be pushed to number six by the end of the year, unseated by Tata Teleservices (72.53 million, 2.3 million added in June) and Idea Cellular (68.86 million, 2.1 million added in June).

BSNL reported a net loss – it’s first ever since inception – of Rs. 1822.65 crore ($393 million) for the financial year 2009-10, on a 10.4 reduction in revenues (at Rs. 32,045 crore, down from Rs. 35,812 crore). The company was hit by both reduction in tariff (all telecom operators faced that problem) and higher expenditure due to wage revisions, amounting to an additional Rs. 2900 crore outgo, without which, according to outgoing CMD Kuldeep Goyal, the company would have recorded a profit of Rs. 703 crore.

BSNL’s Broadband Revenues

Interesting to note that BSNL reported a 47% increase in broadband revenues for the year, up from Rs. 795 crore to Rs. 2845 crore in FY10, from Rs. 1690 crore in FY09

As an aside, a faux pas from BSNL PR, on the appointment: “He is one of the few senior officials who command respect among close to three lakh employees of BSNL.” So the rest don’t, eh?