There is no doubt that the Department of Telecom (DoT) in India is still a great power center. But, this is not due to the fact that it makes the rules by which the telecom industry operates. The department also controls a majority equity stake in four of India’s largest telecom companies. It still has a significant role to play in the allocation of funds to these PSUs. Though it may not be interfering in the day-to-day functioning of these companies, it does wield considerable influence over them. The companies under its fold are into both, telecom services and telecom equipment and turnkey businesses. The telecom service operators BSNL and MTNL constitute about 66.5 percent of the revenue generated by the entire telecom services industry.

And the equipment companies account for more than 8 percent of the entire equipment industry’s revenues.

BSNL: Having just celebrated the 150th year of telecommunication in the country, BSNL was a charged-up company during FY 2002–03. It undertook one of the largest mobile network rollout in the world—making its cellular phone service ring in at almost every nook and cranny of the country. And by the end of the fiscal, BSNL had captured a large 18 percent share of the country’s cellular subscriber base, thus becoming the second largest mobile operator in India.

In basic services and NLD operations, where it is having over 80 percent market share, it has to reinvent itself from achieving targets to providing quality and customer-friendly service. In the corporate market for domestic leased circuits and datacom services, BSNL could have already taken the right steps. It has its optical fiber cables laid in the remotest areas of the country. The National Internet Backbone project is about to enter the second phase, and technologies like MPLS routing have been implemented across major cities. All this is expected to bear fruits in the years to come. However, even in this capex-intensive activity, the competition is heating up.

BSNL’s 150 years of experience and an incomparable wealth of legacy network are its biggest assets. And the mobile success it achieved during the last fiscal augurs well for it. However, some rationalization needs to be done with respect to its social obligations.

MTNL: Once the jewel in DoT’s crown, this Miniratna used to lord over two of the most lucrative telecom markets in India—Delhi and Mumbai. Not anymore! Companies like Bharti, Hutch, Tata and Reliance have stolen the thunder from it. MTNL clearly lost out, as it was not quick enough to spot the mobile opportunity. For instance, AirTel has been adding mobile subscribers at the rate of more than 50 percent per year in Delhi since its launch in 1996, while MTNL’s basic phone subscriber base is stagnating at a 3 percent growth rate. After a disastrous experiment with wireless-in-local-loop, it was only recently that MTNL took the necessary step of getting aggressive to the challenge posed by the cellular service providers and new basic service operators. It is going to be an uphill task for the company, as it has not been used to the fiercely competitive scenario that exists today. To survive, MTNL will need to have greater operational independence and professional management.