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BSNL's woes not due to tariff rollback

By Sandeep Dikshit

NEW DELHI MAY 14. Although the Communications Minister, Arun Shourie, claimed on Tuesday that the Bharat Sanchar Nigam Limited (BSNL) would go into the red because of the "partial rollback" in phone tariffs, the reality seems to be different

Senior telecom officials had conceded the possibility of the organisation sliding into losses as far back as in December when the new phone tariffs suggested by the Telecom Regulatory Authority of India (TRAI) were nowhere in sight.

The fears of senior telecom officials, being expressed for quite some time, were put in black and white in an internal paper issued in January. "The possibility of BSNL going into the red in 2003-04 is not ruled out," observed an analysis of the company's financial health. At that time, the TRAI was yet to announce the revised tariffs.

Some of the main reasons affecting the BSNL's revenues are fall in long distance charges, huge number of faulty phones in rural areas, poaching of high paying customers by private phone companies, outstanding due to lax revenue collection and massive surrenders of fixed phones.

All these factors have combined to reduce the per exchange line revenue from Rs. 850 in 1996 to Rs. 559 at present. On face value, a fall in revenue by nearly Rs. 300 a line does not appear to be much. But the big picture emerges if this is multiplied with the BSNL's huge subscriber base of close to four crores. In just three fiscal years — between 1999-2000 and 2001-2002 — profits have plummeted by a massive Rs. 5,600 crores.

Analysts point out that the adverse impact of some of these factors is debatable. While long distance rates did go down, this loss was made up by direct dialling for distances up to 300 km and buoyancy in call traffic. But some of the reasons seem to beyond the control of the BSNL as well as MTNL. These include the luring away of high paying customers and the massive surrender of fixed phones which has crossed the one million mark.

The BSNL can also justifiably claim that it is not getting paid for running loss making phone services in rural areas but a recent audit pointed out the chinks in its system. A test check of village phones in 11 States revealed that 90 per cent had zero meter reading. In other words, despite investing substantially in equipment and staff to maintain it, revenue earned was negligible. Similarly, arrears are a source of concern. According to officials, unpaid bills have crossed over Rs. 3,000 crores.

Meanwhile, the CPI has decided to hold dharnas at all phone exchanges on May 23. Its general secretary, A.B. Bardhan, criticised Mr. Shourie's comments on Tuesday in which "he blames the entire political class which he thinks is responsible for undoing what he wanted to do".

Related Stories:
Partial rollback of phone tariffs
Shourie pessimistic, BSNL optimistic

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