Indian PM drives push to fix BSNL

Nicole McCormick
11 Jan 2010

India’s Prime Minister, Manmohan Singh, has weighed into the debate on how to fix BSNL’s financial woes, announcing the formation of a high-level government committee to review BSNL’s ailing performance.

“There was an agreement that the situation of BSNL required immediate action to address both the short as well as long-term issues affecting its financial health and competitiveness,” according to statement from the Prime Minister’s office.

The committee, to be chaired by Singh’s Adviser on Public Information Infrastructure and Innovation, Sam Pitroda, will investigate BSNL’s botched GSM expansion tender.

Last week, BSNL's board put the state-owned operator’s 93-million line tender on ice. The board is awaiting an investigation into alleged tender irregularities by the Central Vigilance Committee (CVC), which is examining why BSNL renegotiated on price with Ericsson.

Chinese vendor Huawei was last month also reportedly dropped from the tender reportedly because of security concerns.

Meanwhile, Pitroda has reportedly called for the immediate IPO of a 10% stake in BSNL as a means to raise revenues for the state giant. Pitroda has ruled out merging BSNL with the other government-owned carrier, MTNL, but he told the Business Standard that he aims to move “quickly” to ratify BSNL’s IPO plans.

However, BSNL’s unions vehemently oppose any plans for a listing of the state telco. And Pitroda will also need to convince Telecom Minister A. Raja of the merits of an IPO.

In the year to end-March, BSNL’s revenue fell 12% to around INR330 billion ($7.2 billion), while its cellular ranking has fallen from third spot to fifth place since 2005.

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