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Why BSNL is the biggest victim of AatmaNirbhar Bharat

Business Today logo Business Today 25-11-2020 Manu Kaushik
a car parked on a city street: Why BSNL is the biggest victim of AatmaNirbhar Bharat © India Today Group Why BSNL is the biggest victim of AatmaNirbhar Bharat

The last few days have been eventful for BSNL. Last week, the state-run telco reportedly said that the bids submitted by domestic vendors are almost 89 per cent higher than the lowest bidder for its 4G network tender. In July, BSNL had scrapped its previous tender in order to avoid participation from Chinese vendors like Huawei and ZTE in the aftermath of cross-border tensions between India and China.

The tender cancellation happened right after the think-tank NITI Aayog conducted a meeting in early June with nearly three dozen domestic original equipment makers (OEMs), BSNL and Department of Telecommunications (DoT) officials to discuss the possibility of rolling out a 4G network with indigenous capabilities.

Although the BSNL management seems to be keen on promoting local manufacturing of telecom gears, it has already made it clear that the telco doesn't have money for experimentation, and the local OEMs are required to demonstrate their capabilities with the ready-to-use products. The fact that Indian vendors are unable to match the pricing of foreign vendors shows that local equipment ecosystem needs to evolve a lot more rather than depending hugely on the government's ambitious AatmaNirbhar Bharat mission.

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Ever since BSNL has cancelled its tender, the domestic OEMs have regained confidence in their potential to capture domestic equipment market. They believe that if the government creates an enabling environment for them - something on the lines of what Chinese government did for their domestic firms (funding, preferential treatment, etc) - they can replace Chinese equipment over the next few years. But with such a huge price differential (nearly 90 per cent), it would be inappropriate for BSNL, which functions like a commercial entity, to bear the cost of efficiencies of the local vendors.

As such, BSNL is going to be a late entrant in the 4G game. To expect state-owned telco to buy overpriced equipment in order to promote domestic manufacturing would pull it further down, and add to its piling up losses.

"BSNL is in critical condition and is exploring ways and means to be able to once again become competitive in the market. The Cabinet approval for revival of BSNL was in that direction. BSNL is already having lot of social obligation, compliance obligation which are not there in private sector. BSNL must be competitive and be able to survive, sustain and grow in the hyper-competitive market, and the interests of BSNL must be safeguarded," BSNL CMD PK Purwar had said in the NITI Aayog meeting.

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To make it worse for BSNL, a technical committee formed by DoT has recently asked BSNL to use Indian-made 4G core in its network. This committee has also told BSNL to pause its 2G investments. Unlike other telcos, BSNL is hugely dependent on 2G customers which constitute about 70 per cent of its total subscriber base. "The entry into 4G is not exciting anymore given that the telcos globally have started big investments in 5G. As such, a full-fledged 4G rollout is expected to take a couple of years for BSNL and MTNL," says a telecom consultant.

Telcos like BSNL are primarily using equipment from foreign vendors. It's not that the BSNL has not worked with domestic OEMs. Most of the landline systems used by BSNL have been procured from the Indian manufacturers. But those are believed to be commercial decisions, and quite different from the current top-down policymaking process.

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