BSNL, MTNL hit by competition, rising costs: Government

Government on Wednesday said state-run BSNL and MTNL suffered losses to the tune of Rs. 12,960 crore in 2011-12 as a result of stiff competition in mobile sector, high staff cost and payment of spectrum charges.

"The loss of BSNL during 2011-12 stood at Rs. 8,851 crore and MTNL at Rs. 4,109 crore," Minister of State for Communications and Information Technology Milind Deora said in a written reply to Lok Sabha.

BSNL suffered a loss of Rs. 1,823 crore in 2009-10 and Rs. 6,384 crore in 2010-11 while MTNL's loss stood at Rs. 2,611 crore in 2009-10 and Rs. 2,802 crore in 2010-11, Deora added.

Citing reasons for losses of the two state-run telecom companies, Deora said the revenue has decreased because of fixed to mobile substitution and stiff competition in mobile sector.

"Staff cost is very high as compared to the other private operators. In case of BSNL, it is around 50 percent and in case of MTNL, it is more than 70 percent of the revenue," Deora said.

He added both BSNL and MTNL have paid Rs. 18,500 crore and Rs. 11,098 crore respectively as upfront spectrum charges for 3G (third generation) and broadband wireless access (BWA).

The market share of two telcos has also declined in the last two years.

"Market share of BSNL stood at 17.34 percent as on March 31, 2010 which has declined to 14.14 percent as on September 30, 2012 while that of MTNL has declined to 10.67 percent from 14.21 percent in the same period," Deora said.

On a query if both PSUs have taken loan and sold their properties to meet administrative expenses, Deora said BSNL and MTNL have not sold land assests but have taken loans.

"During the last three years, BSNL has taken a loan of Rs. 1,320 crore for capex and has paid Rs. 99 crore as interest on loan whereas MTNL has taken a loan of Rs. 11,264 crore and has paid Rs. 2,064 crore as interest on loan till October 2012," Deora said.

He added both the PSUs have taken a number of steps to improve their financial position.

In order to strengthen its sales and distribution channel of mobile, BSNL has started Project Vijay and also plans to augment capacity by 15 million in phase VII.

The telecom PSU holds weekly meetings with retailers and sales team at district level and also fixes targets to sales team.

In the same way, MTNL is reviewing its tariff for various products and services so as to make them customer friendly and has launched loyalty scheme and special care services of corporate customers.