BSNL director — finance, S Okay Gupta has shot off a letter to all chief common managers of telecom circles, flagging the “fiercest ever competition” being confronted by the telecom sector and mentioned “predatory tariff offerings by the competitors” has triggered a pointy decline in income from companies.
“The BSNL management is making all-out efforts to ease the pressure on liquidity. It is expected that in the near future, the liquidity position of the company will start improving,” Gupta mentioned within the letter dated 16 May.
He asserted that normalcy in liquidity place is anticipated to be restored by the subsequent quarter.
BSNL has been capable of maintain its buyer base, regardless of the persistent strain of competitors on its income.
“The telecom sector being capital intensive, wherein even to remain in business ‘or’ to ensure business sustainability, the service providers are required to invest in newer technologies at frequent intervals, as technologies evolve at a very fast pace,” the letter mentioned.
The cumulative impact of those elements has resulted within the liquidity crunch, Gupta added.
The letter assumes significance as distressed telecom PSUs Mahanagar Telephone Nigam Ltd (MTNL) and BSNL are saddled with huge debt and have confronted issues in clearing workers salaries within the current previous.
The authorities is within the means of figuring out a rescue plan for MTNL and BSNL within the type of a revival package deal that entails elements like voluntary retirement scheme (VRS), asset monetisation, and allocation of 4G spectrum.
Overall, the telecom sector has been battered by falling tariffs, eroding profitability, and towering debt, within the face of stiff competitors triggered by disruptive choices of Reliance Jio, owned by richest Indian Mukesh Ambani.
The relentless tariff conflict that ensued after Jio’s entry into the telecom sector with free voice calls and SMS, bundled with low-cost knowledge has led to strain on margins of even personal operators which have scrambled to match the competitors.
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