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BSNL Cash Reserves Decline 95.8% To Rs 1,214.44 crores in 2011-12 In 3 Years

bsnl-logoBSNL, government owned telecom company has recorded a steep decline in its cash reserves to Rs 1,214.44 crores in 2011-12 from Rs 29,355.5 crore in 2009-10, down by 95.8% over the three year period, as per a written reply to the Lok Sabha by Dr Killi Kruparani Minister of state in the Ministry of Communications & Information Technology.The Economic Times quotes Telecom minister Kapil Sibal as saying that cash reserve has declined due to the loss of Rs. 6,384 crores incurred by the company in 2010-11, the payment of Rs. 18,500 crores towards 3G spectrum and Broadband Wireless Access (BWA) spectrum, payment of Rs. 5,301 crores to LIC towards group leave encashment scheme, payment of Rs.2,900 crores on implementation of revised pay scale.

Financial Status of BSNL

BSNL has been recording a net loss since 2009-10 posting a total loss of 1,823 crore in that year. This increased by 250% to Rs 6,384 crore, over the next year in FY-11. Further in 2011-12, the company recorded a loss of Rs.8,851 crores. Even in September 2012, Milind Deora, the Minister of State for Communications and Information Technology in a written reply to the Rajya Sabha cited high expenditure, fall in ARPU and declining revenue as the reasons for the loss incurred by the company.

Kapil Sibal has called for a plan from BSNL to turn the company profitable. This plan seems to have been in progress since September 2012 for Deora had also mentioned of the steps that are being taken after Department of Telecommunication’s (DoT) review of BSNL’s working. Some of the proposed steps included planned focus on broadband and next-generation voice service providing a steady revenue stream. They also intend to improve the services provided by the company to its customers like service delivery, customer care, among others. The company also plans to reduce its employee force by 1,00,000 employees by announcing Voluntary Retirement Schemes (VRS). They also plan to share non-electric infrastructure. In August 2012, BSNL had also intended to hive off its tower infrastructure into a separate company. From the plans announced last year, it also appears that they intend to lease out their real estate to increase revenue streams for the company.

The company’s average revenue per user (ARPU) has also been steadily declining over time while the expenditure on maintaining their large work force account for 50% of their revenue, he added. In addition, BSNL also faces stiff competition from private players in the telecom industry. Note that the money paid for the BWA spectrum is likely to be refunded to the company, however only during the next auction.

Previous Developements

In March 2013, BSNL had launched OnMobile’s music download service for its customers. In November 2012, BSNL had announced a partnership with Russia’s NIS Glonass to offer its satellite-based navigation service GLONASS (Globalnaya Navigatsionnaya Sputnikovaya Sistema). In the same month last year, BSNL’s pilot program of Mobile Money transfer service along with India Post was launched officially. Fees for this service may be waived off for BPL families.

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