??Case Study: The Downfall of BSNL - Lessons for Today's Telecom Sector ??
Chinmay Malvankar
Market Research Analyst | Healthcare Expert | Delivering Data-Driven Insights to Drive Business Success
In the late 1990s and early 2000s, Bharat Sanchar Nigam Limited (BSNL) was a telecom giant in India. However, the subsequent decades saw its significant decline. Understanding the factors behind this downfall offers valuable insights for the telecom industry.
In 2003, BSNL held a commanding 33% of the mobile subscriber market. Fast forward to June 2021, BSNL’s market share plummeted to around 10.5%, while private sector players like Reliance Jio, Airtel, and Vodafone-Idea dominated with a combined market share of 89.95%.
BSNL was slow to roll out 4G services, while competitors rapidly deployed 4G and began transitioning to 5G. This technological lag significantly impacted its subscriber base. BSNL’s 4G rollout only began in select areas in 2019, about eight years behind private operators.
?? Regional Adoption
Initially strong in rural and semi-urban areas, BSNL struggled to maintain this as private operators expanded their reach with better services and competitive pricing.
Although traditionally competitive, BSNL couldn't match the aggressive pricing strategies of private players. Jio’s disruptive entry with free voice calls and low-cost data plans drastically shifted market dynamics.
?? Competitor Landscape
Key Competitors: Reliance Jio, Airtel, and Vodafone-Idea. These private players invested heavily in network infrastructure, technology, and customer service, giving them a significant edge over BSNL.
??Strategies Adopted
- BSNL’s Strategy: Focused on government and institutional clients, lagging in aggressive consumer marketing and technological upgrades.
- Competitors’ Strategies:
- Jio: Introduced disruptive pricing and bundled offers.
- Airtel: Invested in network quality and customer service.
- Vodafone-Idea: Focused on innovative data plans and extensive 4G network coverage.
Inconsistent service quality and poor customer support contributed to customer churn. As of 2018, BSNL had one of the highest call drop rates in the industry.
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By 2019, BSNL had accumulated a debt of over ?90,000 crores, significantly impacting its operational capabilities. From a peak revenue of ?50,000 crores in 2006, BSNL’s revenue fell to approximately ?18,000 crores by 2020.
??♂? Government’s Role
The government’s role in BSNL’s downfall cannot be ignored:
- Bureaucratic Inefficiency: BSNL’s labyrinthine bureaucratic structure and inherent inefficiencies impeded swift decision-making and market responsiveness.
- Regulatory Delays: Frequent delays in the allocation of spectrum and licenses put BSNL at a significant disadvantage compared to its private counterparts.
- High Employee Costs: Government-mandated high employee costs accounted for approximately 55% to 60% of the company’s expenditure, further straining its financial health.
- Interference and Inaction: Repeated government interference and slow-paced decision-making hindered BSNL's ability to compete effectively in a rapidly evolving market.
??Revival Efforts
In response to its financial crisis, the government approved multiple revival packages totaling over ?2 lakh crores since 2019, including measures like debt restructuring, voluntary retirement schemes, and spectrum allocation.
?? Lessons for Telecom Companies
- Adapt and Innovate: Stay ahead in technology adoption to meet evolving consumer demands.
- Agility in Decision-Making: Streamline processes to ensure swift and effective responses to market changes.
- Financial Health: Maintain robust financial strategies to support continuous growth and investment.
- Customer Focus: Prioritize customer service and engagement to build lasting relationships.
- Competitive Strategy: Continuously assess and adapt to competitive pressures with innovative solutions.
BSNL's story is a powerful reminder that in the rapidly evolving telecom industry, agility, innovation, and customer-centric strategies are crucial for sustained success.
What are your thoughts on BSNL’s journey and the lessons it offers? Share your insights in the comments below! ??