The BSNL Saga Continued

This is sequel to my earlier blog post http://obvioustruths.blogspot.in/2016/10/ease-of-doing-business.html

I must add a note on what happened after I got my replacement SIM. I asked if I could get Internet data access. I was told to write a letter. I had spent a lot of time in the run-around to get the SIM; so, I said "Thanks, I will come back later for that" and rushed out. I was going out of town the next day and I left the phone with the BSNL SIM at home and went on my trip; it was not going to be of much use during that trip without data access! 

I did not try to use that phone for about ten days after my return, partly out of disgust. Then one morning this week, I switched the phone on and discovered that the SIM was not operational. The phone said that that the "SIM was not provisioned".

So, back to BSNL. The staff member at the postpaid desk looked up the records and found that the customer care people who had acted on my “SIM-lost” call (before the new SIM was issued) had disabled the phone number concerned. The staff member who issued the replacement SIM had informed them that a new SIM had been issued. But her communication did not have the desired effect. She said that she would send an email to them and that the SIM would be operational again within two hours. It is now working.

I don't worry too much about the run-around I was given. What else do you expect when three people are employed to do the work of one? One to tell the customer when to write letters, fill forms, and get Xerox copies made, one to handle the phone at the call centre, and one in the back office! It is naturally difficult for them to coordinate reliably!

What bothers me is that this is how millions of customers are treated by companies like this. The result is there for all to see. The losses of BSNL are described by the Hindu dated November 17, 2015 as follows ( http://www.thehindu.com/business/Industry/bsnl-reports-operating-profit-of-rs-672-cr-for-fy15/article7888002.ece).

QUOTE  

The net loss of BSNL though increased to Rs 8,234 crore for the reported fiscal compared with Rs 7,020 crore last year, mainly on account of asset depreciation calculated as per the Companies Act.   

UNQUOTE

Why blame the Companies Act? Depreciation is a fact of life; you cannot wish it away! Every company accounts for depreciation.

What is the value of assets that are depreciating? Wikipedia says that the assets of BSNL were ₹893 billion in 2014. https://en.wikipedia.org/wiki/Bharat_Sanchar_Nigam_Limited

That is close to 90,000 Crores of rupees, making BSNL the tenth largest company in India in terms of assets!

Meanwhile yet another telecom service provider has entered the field and is investing Rs. 150,000 Crores of rupees.
Reliance Jio initial investment at Rs150,000 crore: Mukesh Ambani

Rs 100,000 Crores seems to be chicken feed for India. It lets one company with roughly that much of assets bleed 8% of its net worth every year, while another company pours one and a half times that amount into creating a similar infrastructure. Would it not have made more sense to improve the management of the company with the tenth largest assets? Are we waiting for ₹893 billion to slowly wither away because of increasing competition?

Let me return to the starting point of this series of my blog posts. Ease of doing business is deplorable in most places in India. This does not merely affect the confidence of the foreign investor. It plays havoc with the productivity of the average Indian; and, a nation’s GDP is directly proportional to the productivity of its people.

We must also worry about productivity of the country’s wealth invested in public sector companies. What is the point in attracting the foreign investor when the companies in which our money is invested are loss makers? You can be sure that the foreign investor is not going to set up and run loss making companies in India. He will ensure that he gets a healthy return on his capital. Why can’t we ensure the same for our investments?

Compare the revenue per employee in two telecom companies of India

Company	Revenue (Rs. Crores)	Employees
BSNL	28645	> 200,000
Airtel	96,600	24868

Livemint reported the following in 2013:

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In 2009, a panel consisting of technocrat Sam Pitroda and banker Deepak Parekh had recommended that the government sell a 30% stake in the company to the public and also cut its staff by 100,000.

The government had failed to act on these proposals despite the BSNL board approving the same, stalling its revival plan.

UNQUOTE

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