Lok Sabha Question No. 44 (STARRED), answered on 2016-04-27
Subject: Market Share of Telecom PSUs
Ministry: COMMUNICATIONS AND INFORMATION TECHNOLOGY
Asked by: NARANBHAI KACHHADIA, C.S. PUTTARAJU

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY DEPARTMENT OF TELECOMMUNICATIONS

## LOK SABHA STARRED QUESTION NO.44 TO BE ANSWERED ON 27 th  APRIL, 2016

## MARKET SHARE OF TELECOM PSUs

- †*44.  SHRI NARANBHAI KACHHADIYA: SHRI C.S. PUTTA RAJU:

Will the Minister of COMMUNICATIONS AND INFORMATION TECHNOLOGY be pleased to state:

- (a) the  market  share  of  telecom  Public  Sector  Undertakings  (PSUs) i.e. Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited in comparison to private players and the reasons for decline, if any, in their subscribers base;
- (b) whether the Government proposes to improve the market share and profitability of these PSUs and if so, the details thereof and the measures taken by the Government in this regard;
- (c) whether the Government proposes to merge both the PSUs as a part of their revival and restructuring plan; and
- (d) if so, the details thereof along with the present status of the proposal?

## ANSWER

## THE MINISTER OF COMMUNICATIONS AND INFORMATION TECHNOLOGY (SHRI RAVI SHANKAR PRASAD)

- (a) to (d) A Statement is laid on the Table of the House.

STATEMENT  TO  BE  LAID  ON  THE  TABLE  OF  THE  LOK  SABHA  IN  RESPECT  OF PARTS (a) TO (d) OF LOK  SABHA STARRED QUESTION NO. 44  FOR 27 TH  APRIL, 2016 REGARDING 'MARKET SHARE OF TELECOM PSUs '.

(a) The  details  of  market  share  of  Bharat  Sanchar  Nigam  Limited  (BSNL),  Mahanagar Telephone  Nigam  Limited  (MTNL)  and  private  telecom  services  providers  during  the  last three years are as follows:

| Name Company   | Market Share (landline and mobile) (in %) as on   | Market Share (landline and mobile) (in %) as on   | Market Share (landline and mobile) (in %) as on   |
|----------------|---------------------------------------------------|---------------------------------------------------|---------------------------------------------------|
| Name Company   | 31.3.2014                                         | 31.3.2015                                         | 31.12.2015 (nine months)                          |
| BSNL*          | 12.88                                             | 9.36                                              | 9.43                                              |
| MTNL*          | 0.80                                              | 0.71                                              | 0.69                                              |
| Total PSU      | 13.68                                             | 10.07                                             | 10.12                                             |
| Total Private  | 86.32                                             | 89.93                                             | 89.88                                             |

* BSNL and MTNL market share is out of all India market share.

The declining trend of market share of Public Sector Undertakings (PSUs) has been arrested in 2015-16 and their market share for the whole year is likely to be higher. Thus, they have been competitive while retaining market share.

The main reasons for the reduction in market share of PSUs over the years are due to combination of number of factors:

## Wireline (landline):

-  There is a general decline in the fixed lines telephone connections as there is a tendency  to  shift  to  mobile  services  because  of  their  convenience,  utility  and availability even while on move.
-  Surrender of telephone connections due to fixed monthly rental charges.
-  Frequent interruption in landline service due to cable damage by various agencies working for road widening works, water and drainage activities, laying of electrical cables, etc. Further, the repair work of damaged cables is delayed due to obtaining permission from local authorities which affects timely restoration.
-  Delay in decision making due to laid down procedures for PSUs.

## Wireless (mobile):

-  Stiff competition in mobile sector.
-  Flexible / Aggressive tariff plans of private Telecom Service Providers.
-  Entry  of  International  Telecom  Service  Providers  with  deep  pockets  that  follow aggressive sales and marketing of services unlike the PSUs.
-  For  the  continuous  technological  advancement  in  telecom  sector,  availability  of funds  and  decision  making  needs  to  be  timely,  which  at  times  gets  delayed  in PSUs.

(b) Government is concerned about the financial condition of BSNL and MTNL. BSNL had a profit of  Rs 10,183 crore in 2004-05 while it incurred loss of Rs 8,234 crore in 2014-15. Since  2009-10,  there  has  been  continuous  reduction  in  revenue  as  against  almost  fixed operating cost which has affected the profitability of both the PSUs. These PSUs have been unable to invest in expansion of their networks due to financial distress.

## Government has provided financial assistance in the following forms:

-  Refund of surrendered BWA (Broadband Wireless Access) spectrum in two service areas held by MTNL and in 6 service areas held by BSNL.  Under this head, Rs.

4533.97 crore has been refunded to MTNL through bonds and Rs. 6724.51 crore is being refunded to BSNL through budgetary resources.

-  The pension liability of MTNL for its staff who got absorbed from DoT, has been taken over by the Government.
-  Notional  loan  of  Rs.  1411  crore  to  BSNL  which  was  due  to  be  paid  to  the Government was waived-off.
-  Financial  support  of    Rs.  492.26  crore  has  been  given  to  MTNL  on  account  of liability arising from levy of Minimum Alternate Tax (MAT).
-  Refund of Rs. 458.04 crore to MTNL and Rs. 169.16 crore to BSNL on account of surrender of CDMA (Code Division Multiple Access) spectrum.

Government has also assigned some projects to BSNL, namely:

-  Comprehensive  Telecom  Development  Plan  for  the  North-Eastern  Region  for provision of mobile services in uncovered villages in Arunachal Pradesh and two districts of Assam at estimated project cost of Rs. 1975.38 crore and implementation  of  Transmission-Media  Plan  for  North  Eastern  Region  at  an estimated cost of Rs.295.97 crore on 10.9.2014.
-  Implementation of providing mobile connectivity in 2199 identified locations in Left Wing Extremism (LWE) affected areas at an estimated cost of Rs. 3567.58 crores on 4.6.2013.
-  Implementation  of  Comprehensive  Telecom  Development  plan  for  Andaman  & Nicobar  Islands  and  Lakshadweep  Islands  through  augmentation  of  satellite connectivity/bandwidth at an estimated cost of Rs. 120.49 crores on 7.11.2014.

While competing with private operators, BSNL has also have also undertaken several public  service  works  at  time  of  emergencies  such  as  earthquake  in  Nepal,  floods  in Uttarakhand,  Kashmir  and  Chennai  cyclones  in  coastal  areas.  BSNL  has  been  widely appreciated for these services in times of disaster.

BSNL and MTNL themselves are also making relentless efforts towards their revival. Some of the steps being taken by BSNL and MTNL in this direction are as follows:

## BSNL

-  Plans to install 10,510 of 3G Base Transceiver Stations (BTSs) and 14,232 of 2G BTSs under Phase-VII GSM  (Global System for Mobile Communication) expansion for 15 Million lines. Out of the planned BTSs, 10,013 (3G) BTSs and 13,047  (2G)  BTSs  are  operational.  This  has  improved  2G  and  3G  network coverage and data capability of 3G networks.
-  Implemented  ERP  (Enterprise  Resource  Planning)  as  one  of  the  important  IT initiative in all circles.
-  During the current Five Year Plan (2012-17), BSNL has plans to make the entire wire  line  customer  base  network  IP  enabled.  Next  Generation  Network  (NGN) equipment based on the latest architecture are planned to be deployed gradually to replace the entire Circuit Switched equipments/ Digital Telephone Exchanges.
-  Setup wireline call centres for the all of its customers of landline and broadband at Dehradun, Ajmer and Bangalore.
-  Launched  various  customer  centric  initiatives  like  Night  free  calling  from  landline from 9:00 pm to 7:00 am, Free incoming calls while roaming, increased minimum speed of broadband to 2 Mbps etc.
-  Based on Government policy on Virtual Network Operator (VNO), BSNL has plans for optimum utilization of its network.

## MTNL

-  Plans to upgrade the existing data speeds over wireless network.
-  Plans for up-gradation / augmentation / expansion of existing 2G/3G network.

-  Plans to provide the backhaul media connectivity of existing mobile tower sites in Delhi and Mumbai on Optical Fibre Cable (OFC) network in place of Microwave network.
-  MTNL is also exploring synergy with BSNL for its mobile services.
-  Set  up  of  wireline  call  centers  for  the  customers  of  landline,  mobile  and broadband at Delhi and Mumbai.
-  Launched Night free calling from landline from 10:00 pm to 7:00 am.
-  To reduce call drops steps  such as revised frequency plan, testing with IP Tool, reinforcing of network, etc. have been undertaken.
-  MTNL has plans for optimum utilization of its network based on Virtual Network Operator (VNO) policy.

Due to continuous efforts BSNL and MTNL, have achieved the following:-

## BSNL

-  Income from services has increased by 4.16% in 2014-15 as compared to 2013-14. In 2014-15 it is Rs 27,242 crore as compared to Rs.26,153 crore in 2013-14.
-  BSNL income from services has increased by 2.16% in 2015-16 (first nine months upto 31.12.2015) as compared to same period of previous financial year (Rs.18,508 crore in 2015-16  as compared to Rs 18,117 crore for 2014-15).
-  BSNL  has  earned  an  operating  profit  of  Rs.672  crores  in  FY  2014-15.  The operating profit is likely to be much higher during 2015-16.
-  The net losses for Financial Year 2015-16 are expected to be reduced by 20% as compared to Financial Year 2014-15.
-  For  the  first  time  there  has  been  net  positive  addition  of  2,50,666  mobile connections during 2015-16 due to Mobile Number Portability (MNP).
-  Around 31 lakh net mobile connection increase during 2015-16.
-  Data revenue has increased by 50% in 2015-16 as compared to 2014-15.

## MTNL

-  MTNL's  total  revenue  for  the  quarter  ended  on  31.12.2015  is  Rs  865.52  Crore which is increase of Rs. 25.08 Crore as compared to previous quarter.
-  MTNL's total expenditure has decreased by Rs. 6.30 Cr during this period.
-  The  number  of  subscribers  of  GSM  has  increased  by  104,086  during  the  period from April 2015 to December 2015 and revenue has increased by 3.3% in Q3 as compared to Q2.

(c)&(d) At present, Government has no proposal to merge BSNL and MTNL. However, BSNL and MTNL are trying their best to generate the maximum revenues for their revival and revitalisation.

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