BSNL goes shopping, but risks further degrading its current operations

Amit Gupta/Ovum
02 Dec 2009
00:00
Successfully completing a global acquisition and ensuring that all the intended benefits are derived thereafter requires time and attention from management at all levels. If BSNL acquires a stake in any of the companies it has shown an interest in, the management’s attention would be diverted in that direction. This would mean that even less attention would be given to restructuring its domestic operations at a time when they need it most. This could turn domestic underperformance into existential crisis.

Limited attractiveness as a partner may hamper acquisition efforts

The companies on BSNL’s radar screen are likely to look for a strategic partner rather than just a capital investor. Therefore, complementarities, in addition to capital, could be an important consideration for those companies. These complementarities can be in various forms, such as operating, marketing and technological expertise suitable for emerging markets.

Given BSNL’s less than stellar track record in its home market, it could hardly be considered a strong partner that can bring valuable expertise to the table. While BSNL is eyeing various companies to buy a stake in, those companies may choose to partner with other operators in India and globally that can offer stronger synergies as well as capital.

If this happens then BSNL will end up wasting management time and effort that could be better utilized addressing problems at home.

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