April 18, 2026

BSNL Must Be Converted To A Special Purpose Vehicle

By Linus Garg
First publised on 2022-07-29 10:21:52

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Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

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The government has announced a financial package of Rs 1.64 lakh crore to revive BSNL. The package is designed to de-stress its balance sheet (the public sector telco has run up losses of Rs 30000cr in the last three years), provide it with spectrum and also has a cash component for funding capital expenditure. But the problem is to identify whether BSNL is competitive enough to survive in the cut-throat business of providing telephony and internet connections to customers. It has a miniscule percentage of customers (just over 3%) in the huge market. Its infrastructure is outdated - when private players are jumping to 5G, the government will provide 4G spectrum to BSNL now and 5G will be provided after two years. With this kind of support, is the government not guilty of throwing good money after bad in trying to revive it?

But when one takes into consideration the fact that telecommunication is of strategic importance and cannot be left to the private sector which is guided solely by the profit motive, the importance of BSNL cannot be discounted. Having said that, it still does not make sense for the government to hope for its revival as it has imposed several restrictions (like salary constraints which do not allow it to attract talent) and asked it to make do with outdated technology. As the government needs the BSNL to carry out projects of strategic importance like the BharatNet (to connect all panchayats through broadband connectivity) and taking telephony and internet to areas where private players do not, is it not time to convert it into a special purpose vehicle just to carry out such projects and relieve it of the burden of competing with private players when it is clearly not in a position to do so?

It is time the government defines the role it would like BSNL to play, provide it with full support and allow it to work with complete focus in those areas only.