NEW DELHI: New telecommunications minister Kapil Sibal has his work cut out — to pull out BSNL from its march on the road to ruin after it has emerged that the telco’s actual losses were nearly Rs 6,000 crore for the year ended March 10.
BSNL, which suffered from rampant political interference and neglect under former telecoms minister A Raja , had recently announced a loss of Rs 1,823 crore for the year to March, a first for the company since it was set up. But financials uploaded by the telco on its website reveal that losses were as high as Rs 5,955 crore for this period. In fact the losses would have have been much higher but for the Rs 4,132 crore income from non-telecom-related activities . Off this, about Rs 2500 crore was from interest on its cash reserves , which too dipped to Rs 28,660 crore from Rs 40,000 crore in 2008.
The financial performance of BSNL, once a monopoly in domestic telephony, has been deteriorating over the years as it could not expand on time to compete with private mobile phone firms, such as Bharti Airtel, which took decisions quickly.
Executives with the telco point out that political interference coupled with legal challenges and probes into its tenders for mobile networks resulted in the telco being able to increase its mobile capacity by a mere 20 million since 2005, even as the country added over 450 million mobile users during this time. BSNL’s initial tender for 63 million global system for mobile communications (GSM) in 2006 was slashed to 23 million by Mr Raja in what was his first major decision after taking charge of the ministry.
This tender was further cut to 14 million lines after Nokia Siemens Networks (NSN) that was slated to supply 40% of the contract failed to do so. Its follow-on tender for 93 million GSM lines, the world’s largest equipment order , was cancelled after a series of controversies, even as rivals such as Bharti, Reliance Communications and the Tatas expanded to feed the expanding customer base.
The Parliamentary Accounts Committee had recently pointed out that the ‘single most important reason’ behind BSNL’s decline was failure of the tendering process, leading to non-supply of equipment , which eventually resulted in the stare-owned operator losing market share.
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