Stiff competition hitting BSNL, MTNL, says Prasad

Stiff competition hitting BSNL, MTNL, says Prasad
Ravi Shankar Prasad (File)
New Delhi, Jun 26 (Agencies) | Publish Date: 6/26/2019 11:54:42 AM IST

Absence of 4G services and high employee costs are hitting at the competitive strength of the public sector companies – Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telecom Nigam Limited (MTNL) – at a time when private carriers are offering data services at near to the ground tariffs, communications and IT minister Ravi Shankar Prasad said in Lok Sabha, while adding that proposals to revive the deeply-stressed companies was being prepared. 

“For BSNL and MTNL, stiff competition in mobile segment, high employee cost and absence of 4G services (except in few places for BSNL) in the data-centric telecom market is eroding their competitive strength,” the minister said in Lok Sabha Wednesday, The Economic Times reported. “Indian Institute of Management, Ahmedabad and Deloitte were engaged to facilitate the preparation of the revival or restructuring plan of BSNL and MTNL, respectively. Pursuant to their recommendations and approval of respective Boards, a comprehensive revival plan for BSNL and MTNL is under preparation,” the minister added.  Requests from the carriers to grant additional spectrum with government support for providing 4G services is also included in the revival plan, and the telecom department is taking steps, such as providing contracts to install services in Left Wing Extremist and low connectivity areas and hotspots in rural areas. 

Prasad clarified that no proposal for closure of both PSUs was under consideration of the government. 

As of May-end, BSNL had 1.63 lakh employees and MTNL had 21,679 people on their rolls.  Separately, the government said that the quantum of foreign direct investment (FDI) inflows into India’s telecom sector have plunged to $2.66 billion in FY19 from over $6.21 billion in FY18, but argued that the sharp fall could not be attributed to either financial stress in the industry or regulatory uncertainty. Prasad however said that the telecom sector is facing financial stress due to stiff competition and reduction in tariffs, and gross revenue of two private operators - Airtel and Vodafone-Idea – had also reduced in fiscals 2017-19. 

In addition to this, the DoT has taken several policy initiatives to facilitate infrastructure growth for delivery of quality services, and such that call drops are lowered, Prasad added. Besides liberalisation of spectrum, permitting passive and active infrastructure sharing and notifying the right of way rules – which have eased up installation of towers - about 14.95 lakh additional base stations have been set up since 2014, taking the total BTS count in the country to about 21.45 lakh as of June 2019. 

On the controversial issue of 5G trials involving Huawei, Prasad said that the Chinese vendor’s participation would hinge on the recommendations of a panel looking into 5G security issues. A committee headed by the principal scientific advisor (PSA) has been recently constituted to give recommendations on security relating to 5G technology and trials in India. 

The government has received six proposals for 5G trials, including those from Huawei and China’s ZTE. The minister added that 5G field trials would be undertaken only through licensed telcos “in a restrictive, limited geographical area for specific use cases”. 

The government is yet to take a call on Huawei’s participation in 5G trials and eventual deployments even while telcos have sought clarity before taking a long-term view on investment decisions as billions of dollars would be at stake in greenfield 5G rollouts. 


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