Why BSNL failed? BSNL Case study

Summary

The video script discusses the financial struggles of BSNL, a once leading telecommunications company in India. It delves into the company's history, its peak performance in the early 2000s, and the subsequent decline due to various factors such as political interference, technological stagnation, and intense competition post the entry of Reliance Jio. The script also highlights the government's recent relief package for BSNL, aiming to revive its market presence and improve service quality, while questioning the effectiveness of this package in the face of the current competitive landscape.

Takeaways

• 😀 BSNL, once India's second-largest telecom company, has been in continuous loss since the last 13 years, with total losses exceeding ₹1 lakh crore.
• 🏆 BSNL was incorporated in 2000 and was the top telecom company in India in terms of revenue in the early 2000s, with over 150 million subscribers at its peak.
• 📉 The company's downfall began in 2006 with allegations of misuse of influence against the then Telecom Minister, resulting in significant financial losses for BSNL.
• 📱 BSNL faced challenges in keeping up with technological advancements, notably the delay in launching 3G services, which put it at a disadvantage compared to competitors.
• 🚫 The government's rejection of BSNL's proposals for new technologies and policies, such as the introduction of WiMAX in 2007, further hindered the company's growth.
• 📉 The entry of Reliance Jio in 2016 with its disruptive pricing strategy led to massive losses for BSNL and other incumbent telecom companies.
• 💼 BSNL's decision-making was slow due to its PSU status, which allowed political interference and delayed the company's response to market changes.
• 💡 The government announced a relief package of ₹1.64 lakh crore for BSNL in July 2022 to improve its balance sheet and service quality.
• 🔄 Despite the relief package, analysts believe that BSNL faces an uphill battle in reviving its market position against aggressive competition from private players.
• 🚀 For BSNL to regain its footing, it needs to not only adopt 4G and prepare for 5G but also provide excellent customer service and innovate its offerings.
• 🔄 The relief package may not provide a significant advantage to BSNL as the telecom industry has become highly competitive post the entry of Jio and other private players.

Q & A

What was the relief package announced by the Union Cabinet for BSNL in July 2022?

The Union Cabinet announced a relief package of 1.64 lakh crore for BSNL in July 2022.

What has been the financial performance of BSNL since its peak in 2000?

Since its peak in 2000, BSNL has been continuously facing losses, with a total loss exceeding 1 lakh crore.

What was BSNL's position in the Indian telecom industry in 2000?

In 2000, BSNL was the second-largest telecom company in India, with over 150 million subscribers.

When was BSNL incorporated, and what was its original purpose?

BSNL was incorporated in 2000 when the government decided to divide the telecommunications department into two separate companies, one for fixed-line services (BSNL) and one for mobile services (MTNL).

What was the initial advantage BSNL had over its competitors?

BSNL's initial advantage was its pan-India reach, which its competitors did not have, and its focus on providing proper landline and mobile phone services to the public.

What significant event in 2006 marked the beginning of BSNL's downfall?

The beginning of BSNL's downfall started in 2006 when Dayanidhi Maran, the then Telecom Minister, was accused of influencing BSNL officials to favor his brother's company, causing a loss of 1500 crore to BSNL.

What technology did BSNL propose to adopt in 2007, and what was the government's response?

BSNL proposed to adopt WiMAX technology in 2007, which offered 4G speeds. However, the then Telecom Minister, A. Raja, rejected all the proposals.

Why did BSNL face a significant loss in 2010?

BSNL faced a significant loss in 2010 due to its delayed adoption of new technologies like 3G and slow decision-making processes influenced by political parties.

What impact did the launch of Reliance Jio in 2016 have on BSNL and other telecom companies?

The launch of Reliance Jio in 2016 disrupted the telecom industry, causing significant losses for BSNL as well as other companies like Idea and Airtel, due to its competitive pricing and offerings.

What challenges does BSNL face in reviving its market position after the relief package?

BSNL faces challenges such as intense competition in the telecom industry, the need to adopt 4G and 5G technologies, and the requirement to improve customer service and infrastructure.

What are the expectations from the relief package for BSNL's future?

The expectations from the relief package are that it will help BSNL improve its balance sheet, enhance service quality, and provide better competition to top companies like Airtel and Reliance in the coming years.