Wednesday, October 21, 2009 M-9426201999
Mansi Taneja: Can this man save BSNL?
Business Standard Mansi Taneja / New Delhi October 19, 2009, 0:56 IST

During his short tenure of ten months as Executive Director, MTNL Mumbai, he was able to double the connections in GSM network of MTNL Mumbai and MTNL’s market share was enhanced from 8.93 per cent to 15.5 per cent. During his tenure, broadband service was also started in January 2005 and 40,000 subscribers were enrolled during a short period of nine months.” This is what public sector telco BSNL’s website says about its Chairman and Managing Director Kuldeep Goyal, a man who has been in the news for all of the last few weeks for his decision to be the major partner in a deal to acquire a significant stake in Kuwaiti telecom firm Zain Telecom, through a consortium headed by the relatively unknown Vavasi Group which has a capital of Rs 5 lakh and a negative net worth of Rs 8.7 crore — the total deal size is estimated at $13.7 billion.

This testimonial of the 1972-batch Indian Telecommunication Service (ITS) officer does come as a bit of a surprise since, ever since he took over on August 1, 2007, BSNL’s fortunes have taken a nosedive. Revenues have declined from Rs 39,715 crore in 2006-07 to Rs 38,047 crore in 2007-08 and Rs 35,812 crore in 2008-09. Indeed, had it not been for the interest income of Rs 3,900 crore earned on its Rs 35,000 of cash reserves in 2008-09, the company would have been making huge losses — in the event, it declared a measly Rs 575 crore as profit. In 2007-08, the PSU earned an interest income of Rs 4,004 crore, after which it declared a net profit of Rs 3,009 crore.

Conscious of this, perhaps, and that his term comes to an end next July, Goyal is trying to expand the company in other ways. He went public with the idea of merging BSNL and MTNL some months ago, arguing the merger would create a behemoth with a turnover that would have been greater than even that of Bharti Airtel. Goyal has outlined plans involving sharing the company’s huge network of optic fibre and telecom towers; along with HCL Infosystems, launched a National Broadband Penetration Programme aimed at getting 10-crore subscribers by 2014; more recently, he put in a bid for Sri Lanka’s Millicom but got knocked out soon enough; he’s even spoken of a bid for a telecom licence in Tunisia; and now there’s Zain he is eyeing.

It would be unfair to lay all the blame for BSNL’s failure at Goyal’s door though. Till the time that the telecom minister (Dayanidhi Maran) cut BSNL’s order for mobile phone lines by half a few years ago, the PSU had been matching Bharti in terms of subscriber additions. Once it had no capacity, it started slipping badly — its latest tender is stuck in the courts with one of the parties challenging BSNL’s decision to disqualify it on technical grounds, and no one in the government has felt it necessary to ask the courts to hurry things up.

But it is equally true that, like several other PSU chiefs, Goyal has not been able to assert himself and has, for one reason or another, gone along with his political masters. On Vavasi, as this newspaper reported, a joint MTNL and BSNL committee rejected going along with Vavasi given the company’s lack of sound financials – and yet both PSUs wrote a joint letter to Vavasi expressing their keenness to take a majority stake in a joint special purpose vehicle (SPV) that would buy 46 per cent in Zain, along with Malaysian billionaire Al Bukhary (for the record, Goyal denies any political pressure). For years, BSNL has refused to enter into roaming agreements with private operators who have large subscriber bases and then it goes and ties up with newcomer Swan Telecom. While Swan has little to offer BSNL, the move offers huge advantages to Swan and allows it to offer pan-Indian telecom services without having a network in place — Goyal defends the move saying it is a new initiative he is trying. Despite getting a one-year lead over private sector rivals, BSNL’s 3G services haven’t exactly clicked either with just 75,000 subscribers registered with it so far.

It will be unfortunate if, in July 2010, the best thing BSNL has to write about its chief is what he achieved while at MTNL.

Last updated on 20/10/2009 M-9426201999

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