Disinvest 30% of BSNL: Pitroda panel
04-03-2010
BSNL should lease, not buy, equipment and retire/transfer 100000 employees
A committee headed by Sam Pitroda, advisor to the Prime Minister, which was appointed by the PMO to review the financial performance of PSU Bharat Sanchar Nigam Ltd, has come out with some critical recommendations
First, the government should sell a 30% stake in the company through an initial public offer and also raise funds from the sale of its infrastructure, such as signal towers and real estate
Would this be sale to a strategic investor? No. "There is no question of strategic sales" finance minister Pranab Mukherjee said recently in an interview to Economic Times. "I am very clear about this. The government will retain 51% equity. The methodology (for stake sales) will remain the same as the idea to bring about people ownership in these companies and improve their functioning"
The Committee also made suggestions on purchase of equipment - another big problem. BSNL's 93-million lines GSM tender has been on hold for a long while due to various controversies. Arising from this, the company faces huge capacity crunch in many places and has been constantly losing subscribers and market share.
The Committee recommended scrapping of the 93-million line tender. It said BSNL should follow a lease arrangement for telecom equipment, rather than purchase. Private telecom companies follow such a model for expansion. With this model, BSNL would reduce its capital expenditure and reduce its problem of shortage of young engineers trained in the latest technologies, the panel felt.
"To remain competitive, BSNL should opt for managed services for network operations, IT and call centres" the report said.
The committee has suggested that BSNL should retire or transfer about 100,000 of its employees through measures such as a voluntary retirement scheme (VRS). This is a third of BSNL's total employee strength of 300,000 across the country.
To improve organisational performance and employee productivity substantially, BSNL should induct young talent in all spaces ? technology, marketing, customer services and sales, the committee said in its report.
BSNL should also start a performance-driven culture and complete the absorption of staff from the Indian Telecommunication Service without delay. A restructuring of BSNL is already underway, under which four business units would be created for fixed access, mobility, enterprise and new businesses.
BSNL "is under severe pressure due to increased competition, a declining fixedline market, antiquated processes and procedural bottlenecks, especially related to purchase of equipment" the report said. "Bureaucratic and government-dependent decision making system, lack of collaborative actions, large workforce, regulatory changes, operational inefficiencies and other internal and external challenges" also contributed to its decline.
BSNL's problem is also because of interference from the bureaucracy which rules over the business decisions of the company, without probably understanding the nuances of the business itself.
"Allow the ministry to interact only through board representation and board meetings and not through day-to-day decision-making, interfacing and supervision" the Committee said.
"Separate the post of the Managing Director/Chief Executive Officer (from that of the Chairman). Change the board composition to seven directors and allow the Ministry to interact only through the board, and not through day-to-day decision making" said the panel, recommending that a eminent person from the private domain head the PSU.
The committee also suggested creation of a separate subsidiary to hold a bank of underdeveloped land and other real estate assets in seven cities, estimated to be about 2.5 million sq metres, and unutilised staff quarters. It should monetise the value of this subsidiary by collaborating with an experienced real estate company.
The committee, which also had HDFC Chairman Deepak Parekh and Union telecom secretary P J Thomas as its members, was set up to review the functioning of BSNL.
A committee headed by Sam Pitroda, advisor to the Prime Minister, which was appointed by the PMO to review the financial performance of PSU Bharat Sanchar Nigam Ltd, has come out with some critical recommendations
First, the government should sell a 30% stake in the company through an initial public offer and also raise funds from the sale of its infrastructure, such as signal towers and real estate
Would this be sale to a strategic investor? No. "There is no question of strategic sales" finance minister Pranab Mukherjee said recently in an interview to Economic Times. "I am very clear about this. The government will retain 51% equity. The methodology (for stake sales) will remain the same as the idea to bring about people ownership in these companies and improve their functioning"
The Committee also made suggestions on purchase of equipment - another big problem. BSNL's 93-million lines GSM tender has been on hold for a long while due to various controversies. Arising from this, the company faces huge capacity crunch in many places and has been constantly losing subscribers and market share.
The Committee recommended scrapping of the 93-million line tender. It said BSNL should follow a lease arrangement for telecom equipment, rather than purchase. Private telecom companies follow such a model for expansion. With this model, BSNL would reduce its capital expenditure and reduce its problem of shortage of young engineers trained in the latest technologies, the panel felt.
"To remain competitive, BSNL should opt for managed services for network operations, IT and call centres" the report said.
The committee has suggested that BSNL should retire or transfer about 100,000 of its employees through measures such as a voluntary retirement scheme (VRS). This is a third of BSNL's total employee strength of 300,000 across the country.
To improve organisational performance and employee productivity substantially, BSNL should induct young talent in all spaces ? technology, marketing, customer services and sales, the committee said in its report.
BSNL should also start a performance-driven culture and complete the absorption of staff from the Indian Telecommunication Service without delay. A restructuring of BSNL is already underway, under which four business units would be created for fixed access, mobility, enterprise and new businesses.
BSNL "is under severe pressure due to increased competition, a declining fixedline market, antiquated processes and procedural bottlenecks, especially related to purchase of equipment" the report said. "Bureaucratic and government-dependent decision making system, lack of collaborative actions, large workforce, regulatory changes, operational inefficiencies and other internal and external challenges" also contributed to its decline.
BSNL's problem is also because of interference from the bureaucracy which rules over the business decisions of the company, without probably understanding the nuances of the business itself.
"Allow the ministry to interact only through board representation and board meetings and not through day-to-day decision-making, interfacing and supervision" the Committee said.
"Separate the post of the Managing Director/Chief Executive Officer (from that of the Chairman). Change the board composition to seven directors and allow the Ministry to interact only through the board, and not through day-to-day decision making" said the panel, recommending that a eminent person from the private domain head the PSU.
The committee also suggested creation of a separate subsidiary to hold a bank of underdeveloped land and other real estate assets in seven cities, estimated to be about 2.5 million sq metres, and unutilised staff quarters. It should monetise the value of this subsidiary by collaborating with an experienced real estate company.
The committee, which also had HDFC Chairman Deepak Parekh and Union telecom secretary P J Thomas as its members, was set up to review the functioning of BSNL.
