New Delhi: Bharti Airtel Ltd has vaulted ahead of Bharat Sanchar Nigam Ltd, or BSNL, by revenues, making for the country’s first instance of a private enterprise seeded in the post-liberalization era overtaking a state-owned business in any sector.
In the fiscal year gone by, BSNL is likely to clock revenues of Rs33,359 crore, a contraction of at least 12% from the previous year’s Rs38,053 crore, a senior BSNL executive told Mint, asking he not be identified. This compares with Bharti Airtel’s Rs37,352 crore for fiscal 2009, up 38.3% from the previous fiscal year’s Rs27,000 crore.
A second senior executive confirmed that BSNL’s revenues stood between Rs33,000 crore and Rs34,000 crore. He too requested anonymity because he is not allowed to speak to the media.
Driver’s seat: Sunil Mittal. Ramesh Pathania / Mint
To be sure, several private enterprises in India have overtaken their government-owned peers, who earlier dominated their industries. The most recent instance is that of Reliance Industries Ltd, into which Reliance Petroleum Ltd is merging, resulting in an entity with some 62 million tonnes per annum (mtpa) refining capacity compared with market leader Indian Oil Corp. Ltd’s (IOC) 51 mtpa. In the current fiscal year, the Mukesh Ambani-chaired entity is expected to overtake IOC.
In other areas such as steel, Tata Steel Ltd, after its acquisition of Corus Group Ltd, has overtaken Steel Authority of India Ltd. But all such instances have involved private enterprises with a history stretching back beyond 1991-92, when India started economic reforms.
Despite the fall in revenues, the government-run phone firm earned a net profit of Rs4,900 crore in fiscal 2009, up 38.58% from the previous year’s Rs3,009 crore. The revenues in the fiscal year gone by includes 12% of financial income, the second BSNL executive quoted earlier said.
BSNL at a board meeting on Thursday finalized its financial results for 2008-09. The results of the unlisted firm will be made public after its board approves them in July.
Bharti Airtel, which is already the country’s largest mobile phone services firm by customers, announced on 15 May that it had crossed the 100 million subscriber mark, ranking it the third largest single-country cellular operator in the world.
“At Rs5,000 crore revenues some years ago, we had as part of a vision statement articulated that by fiscal year 2010 we will be No. 1 in revenues (in India),” Sunil Mittal, chairman of Bharti Airtel, said. “It looked a tall order then; I think BSNL was Rs30,000 crore then.”
Earlier this year, BSNL chairman Kuldeep Goyal had said that he expected that his firm’s revenues would remain flat at around Rs38,000 crore in fiscal 2009 as fixed-line subscribers, who accounted for nearly one-third of the company’s business in 2007-08, continued to give up connections as the use of mobile phones spread. The company had earlier targeted revenues of Rs50,000 crore for the year, he said.
Goyal was not available for comment for this story.
Besides fixed lines phones—a dominant share in which has vested it with a 50% share in India’s broadband services market—BSNL offers mobile phone services as also national and international long-distance phone services. Other businesses the firm has started recently include IPTV (short for Internet protocol television) business apart from satellite-based data connectivity and Internet access services.
As of 31 March, BSNL reported a 7% fall in the number of fixed-line phone connections to 29.34 million, while expanding its mobile phone user base 21.78% to 52.14 million.
The second BSNL executive said BSNL’s revenues have taken a hit also on account of removal of what is called access deficit charge, or ADC, a levy that was imposed on private phone firms and used to compensate BSNL for the upkeep and expansion of loss-making rural phone networks.
Phone firms used to pay 0.75% of their revenue to BSNL and international long-distance service providers paid Re1 a minute on incoming calls as ADC from 2003. That levy was discontinued on 1 April 2008. “The phasing out has hurt us a lot,” the executive said.
Revenues from mobile phone services, which stood at Rs10,578.8 crore in the year to March 2008, grew 2-3%, the executive added.
An analyst said BSNL was experiencing the result of falling revenue per user as also slow rate of addition of mobile phone customers. “In terms of revenue market share, Idea Cellular may have already or will soon take over BSNL despite being the sixth largest operator in the country,” said Shubham Majumdar, senior research analyst with Macquarie Securities.
Still, BSNL is optimistic of its future. At the time of launching so-called third generation or 3G phone services that deliver high-speed data, the company said it expected at least 5% of its mobile phone subscribers to shift to such high revenue-generating services from today’s second-generation mobile phone services by the end of the calendar year.