1. Liberalisation (1994-2010) whither BSNL By Dr T.H.Chowdary Director: Center for Telecom Management and Studies Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) 6667-1191(O) 2784-3121® F: +91 (40) 6667-1111 hanuman.chowdary@tcs.com Talk @ BSNL, Hyd : 30 Sept 2010

2. Before NTP-1994 Apply, Apply ; No Reply Huge waiting lists - Mumbai Registered only OYT “it is not compulsory to have a telephone” “Pay up first; complain later” thc_ctms2S450_Sept2010

3. Time taken to add a million telephones 1 Mln2nd3rd4th5th6th7th8 th Year197219801986198919911993 1994 Years9086321.51.0.75 thc_ctmsS450_Sept20103

4. Time taken to add millions of telephones Telephones1 Mln5 Mln10 Mln Fixed90109114 Mobile357 * We are now adding (15 to 17) mln phones/month thc_ctms4S450_Sept2010

5. Cost of an year’s telephone service compared to PCI Year195119942010 PCIX2.51.00.06 thc_ctms5S450_Sept2010 PCI= Year’s per capita income

6. What constrained Inadequate investment Equipment available less than investment could buy- so, (delayed) imports Project sanctions- Account writers - Postal officers as Dir(F) & M(F) Employment creation For 15 to 20 phones, we had one employee Technological lag. – Strowger factory while X-bar was in – X-bar factory while ESS’s were in – Analogue ESS when digital was in – Analogue MARR while digital radio was in – Every technology was imported – wanting latest and proven? thc_ctms6S450_Sept2010

7. thc_ctmsS450_Sept20107 PCI A X TSP Time Affordability A PCI/ Tele-Service Price - PCI: Per Capita Income - TSP: Telephone Service Price - A: Affordability Bring down price to increase affordability

8. Liberalisation Invite investment by demonopolisation – New technology brings down cost (from Rs. 40,000 per wired phone to Rs. 3000/- for cell phone (hand set cost by sub) Competition brings down price Regulation creates Level playing field DOT X P-Telcos – non-level BSNL X P-Telcos – Less non-leveled Competitor enters with new technology & new business models thc_ctms8S450_Sept2010

9. BSNL not prepared & trained to compete (1) Marketing (subscriber or customer?) Legacy costs ( staff) Segmented price-service packages Top Managers on Deputation Compensation for staff & management dislinked from company fortunes No Business Sense (eg: tower lease; out-sourced retail) - Finance is blood for Cos Compete on QOS or Price (new concept: quality of experience by customer) thc_ctms9S450_Sept2010

10. BSNL not prepared /trained to compete (2) Prepaid-a remarkable invention; not by BSNL Board of Directors & CMD & other Executive Directors State Ownerships – Minister as overlord – Parliament & CAG – Vigilance – Recruitment – Labour Lordism thc_ctms10S450_Sept2010

11. THC_CTMSS399_Nov'0811 Growth of Wired Phones in India Source : DOT Annual Report 2003 Total 340 mln = as of Oct’08

12. Cell Phones subs of the top 5 Telcos (July 2010) BhartiRComVodafoneTataTelBSNL Subscribers(mln)1391131117773.7 Market Share(%)21.3417.3717.0811.4711.31 thc_ctms12S450_Sept2010

13. Revenues of Telcos (Rs. Bln) for 2009-’10 BhartiBSNLVodafoneRelianceIdea Cellular 388 (+5%)302(-14%)232(+13.7%)221(+3.5%)114(+11.8) thc_ctms13S450_Sept2010

14. BSNL’s Revenues & Profit/Losses YearRevenue (Rs. In blns)Profit (Rs. In blns) 2004-2005361101.8 2005-200640289.4 2006-200739778.1 2007-200838030.1 2008-20093585.75 2009-2010308(-)14 thc_ctms14S450_Sept2010

15. What is to be done (1) ARPU will come down New Business Model ( off-load work) Incentives – ESOPS Privatization – by statute British Telecom Way Golden Share for government Preferential Equity to Employees ( discounted price) Wind up Telecom Commission thc_ctms15S450_Sept2010

16. What is to be done (2) Massive Retraining Go the VSNL way – a global co Spin off “circles” as independent cos An inter-state & an International co All as fully owned subsidiaries of BSNL Why are you not celebrating the event – A Decade of Dedicated Service thc_ctms16S450_Sept2010

17. Dhanyawad: Thank You thc_ctms17S450_Sept2010