Focus on rural revenues

Published : Jan 30, 2009 00:00 IST

Kuldeep Goyal: We are known as a trusted and transparent telecom brand in the country.-BIJOY GHOSH

Kuldeep Goyal: We are known as a trusted and transparent telecom brand in the country.-BIJOY GHOSH

KULDEEP GOYAL took over as Chairman & Managing Director (CMD), Bharat Sanchar Nigam Limited (BSNL) on August 1, 2007. An engineering graduate from the Indian Institute of Technology Roorkee, he joined the Indian Telecommunication Service in 1972. He was Chief General Manager, Maharashtra, from October 2005 to April 2007 and is credited with the rapid expansion of the telecom network in Maharashtra and Goa during this period. He was Executive Director, Mahanagar Telephone Nigam Limited (MTNL), Mumbai, from December 2004 to October 2005. During this period, when the number of connections more than doubled, he led the growth of the GSM (global system for mobile communications) network of MTNL. He was instrumental in starting the broadband service of MTNL in Mumbai, in January 2005, which had 40,000 customers by October. Goyal has published many articles in Telecommunications journal on various topics. Among them are Telecommunication Industry at a glance, Universal access an international perspective and Trade in telecommunications.

Absolutely unfazed by the stiff competition, Goyal, in an interview to Frontline, said: We are looking at other revenue streams to increase the revenue from the rural sector by providing customised value-added services and deploying cost-effective technologies to make business in rural areas more remunerative The customised value-added services through broadband and 3G are expected to give a boost to our revenue/profitability. Excerpts:

Your annual report shows a decline in the number of fixed telephone lines since 2007. The existing lines are shown to be working at 67 per cent of their installed capacity. But you still have a waiting list for fixed-line connections. Why is this so?

There has been a decline in the number of fixed-line phones, which is a global trend with customers largely preferring mobile connections. However, BSNL continues to provide new fixed-line telephone connections. In 2007-08, we provided 39.52 lakh gross fixed-line connections, and during the current year, 22.09 lakh connections were provided up to November 2008. Broadband has helped arrest the decline in the number of fixed-line phones. We are laying cables, installing WLL BTSs [wireless in local loop base transmission station] to provide new fixed wireless connections to customers. There are waiting lists in certain areas in remote locations, and it is commercially not viable to lay copper cables in those places. We have, therefore, planned to provide fixed-line connections in such areas using CDMA [code division multiple access] technology. Work is in progress, and we hope to clear the present waiting lists within six months.

Even though your profit has declined by almost 50 per cent as against 2007, you have declared an interim dividend of Rs.300 crore and have recommended a final dividend of Rs.525 crore, making the aggregate dividend, at Rs.825 crore, a high 16.5 per cent.

BSNL, being a Central PSU [public sector undertaking], is governed by the dividend guidelines issued by the Government of India, according to which all profit-making PSUs have to pay a certain dividend.

To comply with the above policies of the government, and after considering the business plan of the company, capital investment plan and the availability of reserves, the board considered the declaration of dividend at 16.5 per cent as appropriate. The BSNL board has taken into consideration all the relevant factors before recommending a dividend payout of Rs.825 crore.

The number of public telephones, too, have seen a decline since 2007. Does it mean that PCOs [public call offices] are no longer in demand?

With the increase in tele-density and large-scale development in mobile telephony, the utility of PCOs has eroded to some extent. In fact, PCOs were basically introduced to facilitate making long distance calls for the public at large. Over the past few years, STD [subscriber trunk dialling] rates have become almost at par with local call rates, thereby making the PCO business less remunerative. PCOs are being transformed into integrated telecom centres where people can not only make telephone calls but also surf the Internet and transact in various telecom products and services.

With the changing scenario, we have also taken steps to augment the business of PCO operators through the sale of BSNLs products, namely, SIM [subscriber identity module] cards, recharge coupons, and by offering services such as booking of new broadband/IPTV [internet protocol television] connection, bill collection, Internet surfing and e-PCOs.

Given the tough competition, how is the company going to maintain its USP of connectivity to all at affordable rates?

There has been competition in the telecom sector for the last 10 to 12 years. BSNL has always been in the forefront of the competition, and we have sustained our leadership in the sector. Our efforts have been appreciated, and we are known as a trusted and transparent telecom brand in the country.

However, we foresee an increase in competition as a result of new players launching their services in the next few months. We hope that the use of the latest technologies, affordable rates, and transparency will continue to make BSNL the most preferred operator for customers.

Despite the companys emphasis on rural telephony, there is a decline in the number of village public telephones [VPTs]. Why is this so and what is being done to remedy the situation?

It is not true that there is a decline in the number of village public telephones. Out of the total 5,93,601 inhabited villages, as per Census 2001, BSNL had 5,19,616 VPTs at the close of March 2008. We have added around 8,000 VPTs from April to November 2008, thereby providing VPT facility in 5,27,687 villages.

We are providing VPTs in the uncovered villages as per the guidelines of USOF/DOT [Universal Service Obligation Fund/Department of Telecommunications]. Recently, BSNL was awarded the work of providing VPTs in 60,000 uncovered inhabited villages by USOF, and we have started work on this project.

The mobile segment is particularly competitive. How do you rate your performance vis-a-vis private players, given the fact that being a public sector company you have to operate with certain constraints?

BSNL entered the mobile segment, as the third operator, in October 2002, almost eight years after the entrance of the first mobile operator in the country. Now, BSNL has more than 40 million mobile connections and is growing consistently. BSNL had problems in the past, specifically with the availability of equipment. This has been sorted out, and we hope to be able to increase our customer base significantly in the mobile segment.

Do you see a further dip in your profit given the fact that ADC [access deficit charge] has been abolished and you are supposed to focus on the rural sector, which is less remunerative?

The phasing out of the ADC is bound to have an impact on our profitability. However, the government has agreed to compensate BSNL as per TRAI [Telecom Regulatory Authority of India] recommendations to DOT by the payment of Rs.2000 crore per annum to BSNL through the USO Fund for the social responsibility carried out by BSNL and to maintain a level playing field.

BSNL, as a responsible corporate citizen, understands its responsibility to increase teledensity in the remotest and inaccessible areas. Notwithstanding that, we are looking at other revenue streams to increase the revenue from the rural sector by providing customised value-added services and deploying cost-effective technologies to make business in rural areas more remunerative.

Wi-max [worldwide interoperability for microwave access] is being deployed to provide wireless broadband connectivity through which various value-added services will be offered to customers. We are working on the implementation of a DIT [Department of Information Technology] project to provide broadband service in 1,000 rural blocks for e-governance. The customised value-added services through broadband and 3G are expected to give a boost to our revenue/profitability.

BSNLs expenditure has gone up while income has come down. How do you propose to deal with this situation?

The phasing out of the ADC regime and the consistently falling ARPU [average revenue per user] across the telecom industry has created pressure on the top line of BSNL. Its revenue growth has also been hampered by capacity constraints in the GSM segment owing to issues that are in court. The expenditure has increased marginally, which is largely on account of inflation in the economy. To overcome these challenges, BSNL is taking various steps to increase its income by aggressively rolling out its GSM network, maintaining its leadership position in the broadband segment, leveraging its infrastructure and offering varied and innovative value-added services like IPTV and so on.

In view of the stiff competition in the mobile segment and better career prospects in the private sector, is it a challenge to retain trained, experienced staff?

Despite stiff competition in the mobile segment, employee churn from BSNL to private telecom companies is minimal. There is no proposal as of now to offer VRS [voluntary retirement scheme].

In order to upgrade the skills of our executives and other staff, regular training interventions through internal training centres and external premier business schools are being carried out.

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