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BUSINESS:
TELECOM
ENTER
BABU-TEL
The
vast government telephone monopoly gets corporatised next month but, being
fully state-owned, its problems are far from over
by Sumit
Mitra
On
October 1, when the Department of Telecom Operations (DTO) - the new avatar
of the Department of Telecommunications - begins its life as Bharat Sanchar
Nigam Limited (BSNL), a board-run corporation, it can boast of being the
largest non-oil company of the country. Its net worth, at an estimated
Rs 64,000 crore, will be nearly five times that of the mighty Reliance
Industries. In 1998-99, the last full year for which the accounts are
submitted, the DTO earned an impressive net profit of Rs 10,642 crore.
It has 25 million subscribers and the number is growing at a breathtaking
21 per cent annually. "We will be a Fortune 500 company from the
word 'go'," says A.
Prasad, member (finance) of the Telecom Commission and one of the main
architects of the corporatisation plan. Communications Minister Ram Vilas
Paswan was even more ebullient after DTO employees withdrew their strike
against corporatisation. "The new corporation will compete with the
best in the world," he said. So, is the Union Government unleashing
a corporate giant?
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| Paswan
managed to get the unions to agree to corporatisation |
The answer
is no. Corporatisation is DTO's response to an impending loss of monopoly.
Its huge surpluses, however enviable, are the result of its being both
the batting and the fielding sides all these years, which made tariff
regulation by the umpire, the Telecom Regulatory Authority of India (TRAI),
a herculean exercise.
However,
telecom policy changes since last year are bringing many new teams into
the field. The long-distance market, which accounts for 70 per cent of
DTO's revenues, is now open to whoever has the required cash, and is willing
to roll out a cross-country network on payment of a share of the revenue
to the government. The basic service in all circles is being opened up
to as many players as are willing, again on a revenue-sharing basis. And
the TRAI, sensing competition, cut the maximum long-distance rates by
20 per cent last month. It will "re-balance" the rates again
in March next year. While the tariffs fall, the DTO groans under statutory
obligations to take telephone connections to one-horse towns and villages,
where the traffic is too low to pay even a fraction of the cost of connecting.
"By
corporatising," says DTO Secretary R.N. Goyal, "we are trying
to re-engineer ourselves." There is little to reconstruct though
from DTO's stable of outdated equipment, bureaucratic decision-making
and a notorious reluctance to keep the customer satisfied. The government's
stranglehold makes every purchase by the DTO accountable to at least three
parliamentary committees. The officials are so afraid of being pulled
up by MPs or the anti-corruption police that every commercial decision
is put through a mechanical tendering process, giving quality a go-by.
Even the task of drawing the blueprint for DTO's "re-engineering"
was given to the lowest bidding consultancy. There is also the burden
of servicing low-use customers in poor areas and villages, and the threat
of the high-end customers walking off to the new competitors.
Pg.2
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