BSNL’s Q2 net loss widens to ₹1,357 cr on a steep rise in depreciation, interest

State-owned Bharat Sanchar Nigam Ltd (BSNL) has continued its loss trajectory for the second straight quarter in the current financial year after a brief return to profitability in last two quarters of fiscal 2025.

In the September quarter, BSNL reported a net loss of ₹1,357 crore, wider than ₹1,048 crore in the preceding quarter and the ₹1,241.7 crore it lost in the year-ago quarter, the company’s financial statements dated 14 November show.

BSNL's higher losses can be attributed to an increase in depreciation and amortization expenses, network operating expenses, and finance cost for the company. Depreciation and amortization in the quarter gone by stood at ₹2,477 crore, 57% more than the figure for the year-ago quarter. It was 14.5% more that the preceding quarter.

The company’s revenue from operations during the quarter rose 2.8% sequentially and 6.6% year-on-year to ₹5,166.7 crore largely led by increase in revenues from mobile phone services on the back of a launch of 4G services by the company.

BSNL has 92.3 million mobile subscribers at end-September, Scindia had said last month. This would rank it behind bigger rivals Reliance Jio's 506 million, Bharti Airtel (364 million), and Vodaone Idea (196.7 million).

Capex weight

Communications minister Jyotiraditya Scindia had flagged the expanded depreciation at a media briefing last month. “We (BSNL) may not be able to see that run rate of profitability going forward, as the company did a capex of ₹25,000 crore in FY25 and there will be a close to ₹2,500 crore non-cash hit to the bottomline due to depreciation,” Scindia had said then.

BSNL has set a target to grow revenues by 20% in FY26 to ₹27,500 crore. It had posted a revenue of around ₹23,000 crore in FY25.

Questions emailed to BSNL and the department of telecommunications (DoT) for comments were not answered at the time of publishing.

The latest quarterly loss at BSNL signals the multiple problems at the company, an expert said. "One is the brand is not easily visible and accessible in the country compared to private operators and second is the quality of services at which it really lags," said Faisal Kawoosa, chief analyst at Techarc, a technology market research and consulting firm.

According to Kawoosa, a turnaround for BSNL is difficult looking at the way the operations are run and huge dependency on the government fiscal measures. "There is nothing at stake for BSNL employees and management compared to private operators who are taking the business seriously," he said.

Wages capitalized

Notably, employee bills which used to constitute the highest 43% of the company’s revenue from operations in the year-ago period now accounts for 37% of the company’s revenue. This came about with the change in the company’s practice last year to move employee expenses towards ‘Capital Work-in-Progress’ (CWIP).

In response to Mint’s queries in May, BSNL had clarified that “it is common in the telecom industry to capitalize relevant overheads during periods of large network expansion".

When any company identifies a particular project of capital nature, all expenses related to that are capitalised. It will move to a profit and loss statement (P&L) under depreciation only after the project starts generating revenue.

The company’s revenue from the enterprises service business fell 10% quarter-on-quarter (QoQ) to ₹1,321.7 crore. The revenue from the business, however, rose 0.9% YoY.

The state-run telecom operator saw its average revenue per user (Arpu) rise 12% to ₹91 in July-September from ₹81 in the preceding quarter, Scindia had said.

Arpu is a measure of a telecom company's earning per customer on an average over a specific period, such as a month. The nationwide 4G service rollout has led to higher revenues and a steady uptick in subscriber additions for BSNL.

In the first half of the current financial year, the company’s revenue from operations rose 10.4% to ₹10,193 crore. The company’s loss narrowed to ₹2,404.8 crore from ₹2,952 crore.

After being in testing phase for long, BSNL launched its 4G services on India-made technology on 26 September with over 92,000 towers. Of its total subscriber base of 91.7 million as of August end, the company serves more than 20 million 4G users across the country.

After reporting profits for two consecutive quarters for the first time in 18 years, BSNL was back in the red, with a net loss of ₹1,049 crore in the June quarter. It had posted a net profit of ₹280 crore in the March quarter and ₹262 crore in the December quarter.