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State owned telecom operator BSNL has reported a loss of Rs 7,884 crore for the financial year 2012-13 (FY-13). This was BSNL’s fourth straight loss making fiscal, although the losses have improved 10.93% from Rs 8,851 crore loss in the previous fiscal FY-12.

The telco had last reported a profit in the fiscal FY-09, where it had reported a profit of Rs 575 crore. In subsequent years, it has reported losses of Rs 1,823 crore in FY-10 and Rs 6,384 crore in FY-11.

This was disclosed (pdf, Hindi) by Dr Killi Kruparani, Minister of State for Communications and Information Technology in response to a question in the Rajya Sabha. Note that BSNL is not a listed company, unlike the other state owned telco MTNL.

While the minister didn’t disclose BSNL’s revenues for the entire fiscal, Communications & IT Minister Kapil Sibal had earlier mentioned that BSNL had generated total revenue of Rs 19,305 crore for the nine month period ending December 31, 2012. It had reported revenues of Rs 27,933.50 crore in the previous fiscal (FY-12).

MTNL Losses: Along with BSNL, Kruparani mentioned that MTNL had reported a net loss of Rs 5,321 crore for the fiscal FY-13, up from Rs 4,110 crore loss in the previous fiscal FY-12, Rs 2,802 crore loss in FY-11, Rs 2,611 crore loss in FY-10 and Rs 211 crore profit in FY-09.

Last month, MTNL had reported a loss of Rs 947.1 crore and revenues of Rs 813.5 crore for the quarter ended September 30, 2013 (Q2-FY14). Note that revenues are lower than losses here and this has been the case for the last nine quarters.

Reasons for losses

Kruparani attributed BSNL’s losses to the decline in the company’s revenue and an increase in its expenditure. She said 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 wireless 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 BSNL’s ARPU for the fiscal.

– Increasing expenditure due to salaries of a large legacy work force. The minister noted that employee expenses currently account for 50% of BSNL’s revenues and 103% of MTNL’s revenues.

Plans For BSNL & MTNL’s revival

The minister said the government has setup a Group of Ministers (GoM) in April 2013 to recommend short, medium and long term measures to revive BSNL and MTNL. The ministerial group has held three meetings so far (June 2013, August 2013 and September 2013) and has made the following recommendations, which is currently awaiting Cabinet approval:

– BSNL surrendering its BWA spectrum in six licensed service areas and MTNL surrendering its BWA spectrum in Delhi & Mumbai to get refund amount for such spectrum. This spectrum is currently worth more than Rs 11,000 crore as per a PTI report (via The Hindu Business Line)

– Waiving of the unpaid portion of Rs 7500 Crore notional loan along with the interest. This loan was provided as part of BSNL’s capital structure at the time of its formation.

– Providing pension to MTNL employees in similar lines of BSNL.

Responding to a separate yet similar question, Kruparani also mentioned (pdf, Hindi) that Department of Telecommunications (DoT) has reviewed the performance of BSNL regularly and has taken several steps to improve the financial position of the telco. These include:

– Strengthening BSNL’s sales and distribution system of mobile service and conducting special consumer retention camps.
– Improving the mobile capacity in phase-VII by 15 million.
– Opening up new sales channels in rural areas through agreement with postal department in order to increase its rural reach.
– Aggressively pushing 3G data cards and smart devices bundled with 3G data plans.
– Continued focus on providing value added services to various segments of the society.
– Monitoring its Quality of Service (QoS) parameters to comply with the benchmarks stipulated by Telecom Regulatory Authority of India (TRAI).

Preferential Treatment Proposal to BSNL & MTNL: Last week, Sibal had also mentioned that DoT had sent a draft note for inter-ministerial consultations on October 2013, which proposes that central government ministries, central government public sector undertakings and autonomous bodies should provide preferential treatment to BSNL and MTNL services.

The minister noted that this proposal is not conflicting with the economic policy since this will be limited to reimbursement only and will be restricted to Government employees to whom the reimbursement facility is provided by the government.

Related:

MTNL & BSNL Inks Network & Infrastructure Sharing Deal; Nothing New?
BSNL Reports Rs 19,305 Cr Revenue For Mar-Dec 2012; Rs 6,536 Cr Loss
BSNL Cash Reserves Decline 95.8% To Rs 1,214.44 crores in 2011-12 In 3 Years