bsnl project report

very good

1. A
PROJECT STUDY REPORT
ON
BSNL,
“Financial Overview of Telecom Sector in India”
Submitted in partial fulfillment for the
Award of degree of
Master of Business Administration
Submitted By;
Submitted To;
Vishnu Kumar Sharma Ms.Ruchi Khandelwal
MBA – III Sem ,
2009-2011
DEEPSHIKHA INSTITUTE OF MANAGEMENT STUDIES
ISI-17 RIICO INSTITUTIONAL AREA, SITAPURA
JAIPUR
PREFACE
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2. As the part of my MBA curriculum I was required to undergo summer training in a
business organization for eight or six weeks. I approached BHARAT SANCHAR
NIGAM LIMITTED for this purpose and got an opportunity to get training from Team
Leader who readily agreed to extend his cooperation.
The project was assigned to me by the organization. The topic of my project was
“Financial Overview of telecom Sector in India”. In this record I have put my best
efforts to compile the data to the highest level of accuracy and give my views to the
best of my judgment.
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3. ACKNOWLEDGEMENT
I express my sincere thanks to my project guide, Mrs. Rekha Tambi (Sr. Executive-
HR & ES) for guiding me right form the inception till the successful completion of the
project. I sincerely acknowledge her for extending their valuable guidance, support
for literature, critical reviews of project and the report and above all the moral
support She had provided to me with all stage of this project.
Vishnu kumar Sharma,
MBA – III Sem.
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4. EXECUTIVE SUMMARYEXECUTIVE SUMMARY
The project is an extensive report on how the BSNL company
markets its strategies and how the company has been able in
tackling the present tough competition and how it is cooping up by
the allegations of the quality of its products. The report begins with
the history of the products and the introduction of the BSNL
company.
This report also contains the basic marketing strategies that are
used by the BSNL company of manufacturing process, technology,
production policy, advertising, collaboration, export scenario, future
prospect and government policies. The report includes some of the
key salient features of market trend issues.
In today’s world of cut throat fierce competition, it is very essential
to not only exist but also to excel in the market. Today’s market is
enormously more complex. Hence forth, to survive in the market, the
company not only needs to maximize its profit but also needs to
satisfy its customers and should try to build upon there.
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5. Contents
S.no. Particulars Pages
1. Introduction
2 . Financial Overview
4. Telecom profile
5. Indian Telecom Sector
6. Research Objective
7. Research Methodology
8. A Comprative Swot Analysis
9. Reactivation Of Dormant Retailers Findings
10. Suggestions
11. Annexure
12. Bibliography
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6. Company Proflie
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7. Introduction
Type Communication Service Provider
Availability Countrywide except Delhi & Mumbai
Owner The Government of India
Key people S.D. Saxena (CFO); A.K. Sinha (CEO)
Founded 19th century, incorporated 2000
Website www.bsnl.in
1.1Overview of the BSNL:
BSNL is India's oldest and largest Communication Service Provider (CSP).
Currently BSNL has a customer base of 64.8 million (Basic & Mobile
telephony). It has footprints throughout India except for the metropolitan cities
of Mumbai and New Delhi which are managed by MTNL . As on March 31 , 2010
BSNL commanded a customer base of 33.7 million Wireline, 3.6 million CDMA-
WLL and 27.5 million GSM Mobile subscribers. BSNL's earnings for the
Financial Year ending March 31 , 2010 stood at INR 401.8b (US$ 9.09 b) with
net profit of INR 89.4b (US$ 2.02 billion). Today, BSNL is India's largest Telco
and one of the largest Public Sector Undertaking of the country with authorized
share capital of US$ 3.95 billion (INR 17,500 Crores) and networth of US$
14.32 billion.
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8. 1.2Objective of Study:
The main objective of this study is to carry on brief study on “Financial
Overview Of Telecom Sector in India” through this I am able to get the
difference of various assets and liabilities of the BSNL.
Other objectives of this project are as follows:
·To identify the various assets amount of the BSNL with respect to An-
nual Repots of the BSNL.
·Comparative study of Two year Annual reports.
·To study the various departments for the needs of assets and use-less
assets amount of BSNL Jaipur city center.
1.3Profile of Organisation:
Over views of Organisation
History
The foundation of Telecom Network in India was laid by the British sometime in
19th century. The history of BSNL is linked with the beginning of Telecom in
India. In 19th century and for almost entire 20th century, the Telecom in India
was operated as a Government of India wing. Earlier it was part of erstwhile
Post & Telegraph Department (P&T). In 1975 the Department of Telecom (DoT)
was separated from P&T. DoT was responsible for running of Telecom services
in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL)
was carved out of DoT to run the telecom services of Delhi and Mumbai. It is a
well known fact that BSNL was carved out of Department of Telecom to provide
level playing field to private telecoms.Subsequently in 1990s the telecom sector
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9. was opened up by the Government for Private investment, therefore it became
necessary to separate the Government's policy wing from Operations wing. The
Government of India corporatised the operations wing of DoT on October 01 ,
2000 and named it as Bharat Sanchar Nigam Limited (BSNL).BSNL operates as
a public sector.
Main Services being provided by BSNL
BSNL provides almost every telecom service, however following are the main
Telecom Services being provided by BSNL in India:-
1.Universal Telecom Sevices : Fixed wireline services & Wireless in
Local loop (WLL) using CDMA Technology called bfone and Tarang
respectively. BSNL is dominant operator in fixed line. As on March 31,
2010 (end of financial year) BSNL had 76% share of fixed and WLL
phones.
BSNL Mobile Pre-paid Mobile
2.Cellular Mobile Telephone Services: BSNL is major provider of Cellular
Mobile Telephone services using GSM platform under brandname
Cellone. Pre-paid Cellular services of BSNL are know as Excel. As on
March 31, 2010 BSNL had 17% share of mobile telephony in the country.
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10. BSNL Broadband
3.Internet: BSNL is providing internet as dial-up connection (Sancharnet )
and ADSL-Broadband Dataone. BSNL has around 50% marketshare in
broadband in India. BSNL has planned aggressive rollout in broadband
for current financial year.
4.Intelligent Network (IN): BSNL is providing IN services like tele-voting,
toll free calling, premium calling etc.
BSNL Present & Future
Since its corporatisation in October 2000, BSNL has been actively providing
connections in both Urban and Rural areas and the efficiency of the company
has drastically improved from the days when one had to wait for years to get a
phone connection to now when one can get a connection in even hours. Pre-
activated Mobile connections are available at many places across India. BSNL
has also unveiled very cost-effective Broadband internet access plans
(DataOne) targeted at homes and small businesses. At present BSNL enjoy's
47% of market share of ISP services.
Year of Broadband 2007
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11. Former Indian Communications Minister Thiru Dayanidhi Maran had declared
year 2010 as "Year of Broadband" in India and BSNL is gearing up to provide 5
million Broadband connectivity by the end of 2010. BSNL has upgraded existing
Dataone (Broadband) connections for a speed of up to 2 Mbit/s without any
extra cost. This 2 Mbit/s broadband service is being provided by BSNL at a cost
of just US$ 5.5 per month. Further, BSNL is planning to upgrade its broadband
services to Triple play (telecommunications) in 2010.
BSNL has been asked to add 108 million customers by 2010 by Former Indian
Communications Minister Thiru Dayanidhi Maran. With the frantic activity in the
communication sector in India, the target appears achievable, however due to
intense competition in Indian Telecom sector in recent past BSNL's growth has
slowed down.
BSNL is pioneer of Rural Telephony in India. BSNL has recently bagged 80% of
US$ 580 m (INR 2,500 crores) Rural Telephony project of Government of India.
Challenges
During Financial Year 2009-2010 (From April 01 , 2009 to March 31 ,2010 )
BSNL has added 9.6 million new customers in various telephone services
taking its customer base to 64.8 million. BSNL's nearest competitor Bharti Airtel
is standing at a customer base of 39 million. However, despite impressive
growth shown by BSNL in recent times, the Fixed line customer base of BSNL
is declining. In order to woo back its fixed-line customers BSNL has brought
down long distance calling rate under OneIndia plan, however, the success of
the scheme is not known. However, BSNL faces bleak fiscal 2009-2010 as
users flee, which has been accepted by the CMD BSNL.
Presently there is an intense competition in Indian Telecom sector and various
Telcos are rolling out attractive schemes and are providing good customer
services. However, BSNL being legacy operator and its conversion from a
Government Department, earns lot of criticism for its poor customer service.
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12. Although in recent past there have been tremendous improvement in working of
BSNL but still it is much below the Industry's Expectations. A large aging
(average age 49 years(appx)) workforce (300,000 strong), which is mostly
semi-illetrate or illeterate is the main reason for the poor customer service.
Further, the Top management of BSNL is still working in BSNL on deputation
basis holding Government employee status thus having little commitment to the
organisation. Although in coming years the retirement profile of the workforce is
very fast and around 25% of existing workforce will retire by 2010, however, still
the workforce will be quite large by the industry standards. Quality of the
workforce will also remain an issue.
BSNL at Jaipur Circle
BSNL Jaipur Circle office is situated in City Center area. This office is
undertaking of office. This office are works various areas like Marketing,
Planning, Administrative, Operation & Management and Finance. Each
department works under GM telecom district.
GM delegates our some duties to DGM. DGM is the head of the
department. These posts are highly responsible because DGM is the main
person of the department and DGM gives various approvals of works. This
approval leaves various effect of the department like financial, working
efficiency, functions of departments and field officer works.
Basically BSNL city center works in departmental approaches or
functions. This office provides a support to other departments or employees of
BSNL. In this office calculated various function of employees like salary of
employees, departmental information, various tenders, payment of vendors,
departmental expenditure of general provident funds etc.
But this office run a collection center this collection center collect various
telephones/mobiles/broadband bills.
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13. VISION
TO BECOME THE LARGEST TELECOM SERVICE PROVIDER IN SOUTH EAST ASIA.
MISSION
To provide world class State-of-art technology telecom services on demand
at affordable price.
To Provide world class telecom infrastructure to develop country's
economy.
Objects
To be the Lead Telecom Services Provider.
To provide quality and reliable fixed telecom service to our customer and
thereby increase customer's confidence.
To provide mobile telephone service of high quality and become no. 1 GSM
operator in its area of operation.
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14. To provide point of interconnection to other service provider as per their
requirement promptly.
To facilitate R & D activity in the country.
Contribute towards:
National Plan Target of 500 million subscriber base for India by 2012.
Broadband customers base of 20 million in India by 2010 as per Broadband.
Implementation of Triple play as a regular commercial proposition
The Company
Bharat Sanchar Nigam Limited (known as BSNL) is a public sector
communications company in India . It is the largest telecommunication company
in India and the sixth largest in the world. Its headquarters are at Statesman
House, Barakhamba Road, New Delhi. It has the status of Mini-ratana - a status
assigned to reputed Public Sector companies in India.
During the current financial year, the management based on physical verification
of fixed assets and inventory and reconciliation of various heads of assets and
liabilities in the subsidiary and general ledgers which has resulted into
increase/decrease in the following assets and liabilities taken over as on 01st
October 2000 amounting to net reduction in the assets of Rs. 5,910 lakh (P.Y. - Rs.
25,452 lakh):
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15. In pursuance of the Memorandum of Understanding dated 30th September
2000 executed between Government of India and BSNL, all assets and liabilities in
respect of business carried on by DTS and DTO were transferred to the Company
with effect from 01st October 2000 at a provisional value of Rs. 6,300,000 lakh and
up to previous financial year BSNL has identified net assets of Rs. 6,352,028 lakh
against it.
General Information
No. of Revenue District 2
Population 1,629,881
No. of Tehsil 6
Block H.Q. 7
Total Villages 1221
No. of Villages(Inhabited) 1108
Revenues Strategies
The telecom sector is the most competitive sector post liberalization. This has
resulted in a movement from growth based business model that emphasized growth
in numbers to profit-based model where the success is measured by margins. BSNL
as part of the transition has to adopt both cost reduction and revenue enhancement
measures, which would directly impact profitability.
It is evident that there is a declining trend in basic services and there is
stagnation in cellular revenues. Revenue maximization strategies will have two
components, one internal to the organization and the other external. The internal
aspect would involve an initiative for change of process, technology, organizational
structure etc. In this context, revenue assurance is the key to improving the bottom
line for BSNL. This is proactive strategy to capture all revenues due for the services
provided. Presently, BSNL generates bills through different softwares across the
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16. zones of operation, which are disintegrated and provide only basic solutions. The
industry standard for revenue leakage is about 3 to 7% percent of revenue, which in
money terms translates to about Rs.2100 crores for BSNL. Therefore plugging
revenue leakages is just the first and most obvious part of a Revenue Assurance
initiative. The key concerns for BSNL for effective revenue realization are –
The delay in customer billing after activation
Time lag between calls generated and billed
Scope of fraud
Non-availability of uniform database.
Therefore the focus should be on immediate implementation of CDR based
billing. This would require huge investment but the return would more than
commensurate. The software should be scalable and be able to incorporate all the
next generation value added services. The implementation of CDR based system
will also generate the following benefits:
Plugging of leakage of revenue.
Formulation of appropriate marketing strategies –
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17. Management Profile

Organisation Functional Structure of BSNL Jaipur Circle
SBP Department
17
Chief General Manager
(CGM)
Mr. Hinduja
GM Telecom District
Mr. Prashant Trivedi
Deputy General Manager
(DGM)
(Marketing, Planning &
DGM
(Operation &
Management)
DGM
(Finance)
Mr. S. D. Tyagi
Chief Accounting Officer TR
Account officer TR
1
st
Mr. S.S. Bahdoriya
AO Mob.
Mr. Manoj Yadav
AO Telecom
Revenue 2
nd

Mr. SC Jain
AO SBP
Mr. Ram Sadal
AO Pay
Mr. Naagar
AO Cash
Mr. Ram
Avatar
Jr. Account Officer
Mr. R.S. Yogik
Section Supervisor
Mr. Chandrshekhar
Sr. Trunk
Supervisor
Mr. K.N. Duwedi
Peon
Mr. Gyasi Ram
CO Strategic Business Plans
AO Pay
Mr. Naagar

18. Products
·BSNL LANDLINE
PHONE PLUS SERVICE
NEW TELEPHONE CONNECTION
PERMANENT CONNECTION
CONCESSION IN RENTALS
SHIFT OF TELEPHONE
·BSNL MOBILE
POSTPAID
PREPAID
UNIFIED MESSAGING
GPRS/WAP/MMS
DEMOs
TARIFF
SMS & BULK SMS
·BSNL WLL
·INTERNET SERVICES
NETWORK
BROADBAND
TYPES OF ACCESS
WI-FI
CO-LOCATION SERVICE
BSNL WEB HOSTING
INTERNET TARIFF
DIAL UP INTERNET
SMS& BULK SMS
·BSNL BROADBAND
REGISTER ONLINE
TARIFF
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19. USO FUNDED RURAL BROADBAND
FAQ
CHECK USAGE
·BSNL MANAGED NETWORK SERVICES
·BSNL MPLS-VPN
·ISDN
·INTELLIGENT NETWORK
FREE PHONE SERVICE
PREMIUM RATE SERVICE
INDIA TELEPHONE CARD
VIRTUAL PRIVATE NETWORK (VPN)
VOICE VPN
UNIVERSAL NUMBER
UNIVERSAL PERSONAL NUMBER
TELE VOTING
·VIDEO CONFERENCING
OVERVIEW
TARIFF
FAQ
·AUDIO CONFERENCING
OVERVIEW
TARIFF
FAQ
·I NET
OVERVIEW
SERVICES ON I NET
USING ON I NET
I NET CONNECTIONS
TARIFF
·TELEX/ TELEGRAPH
TELEX/ TELEGRAPH
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20. TARIFF
·EPABX
EPABX
FREE EPABX
TARIFF
CENTREX
CENTREX TARIFF
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21. Profile of company top Management
Director (Operations) - Shri Rajesh Wadhwa
Shri Kuldeep Goyal has taken over as Chairman & Managing Director of BSNL on
August 1, 2007. Shri Kuldeep Goyal joined the Indian Telecommunication Service of
Govt. of India in 1972. He is an Engineering Graduate from IIT Roorkee.
Just prior to taking over as CMD, BSNL, Shri Goyal has worked as Director
(Planning & New Services) and was responsible for planning and execution of
strategy for expansion of BSNL's network.
With more than 35 years of service, Shri Goyal has vast experience in telecom
sector viz. planning, installation, operation and maintenance of wirelines and
wireless services, data services, computerization of various activities in telecom
network and provision of value added services.
While working as chief General Manager, Maharashtra Telecom circle, he was in
charge for operations, planning and expansion of telecom network of the largest
circle of BSNL and contributed to rapid growth of telecom networks in Maharashtra
and Goa. During his short tenure of ten months as Executive Director, MTNL
Mumbai, he was able to double the connections in GSM network of MTNL Mumbai
and MTNL's market share was enhanced from 8.93% to 15.5%. During his tenure,
broadband service was also started in January 2005 and 40000 subscribers were
enrolled during a short period of nine months. Shri Goyal has worked in Yemen on a
foreign project through Telecommunications Consultants India Ltd. He was also a
Member of National Working Group of ITU-T Study Group 2 on operational aspect
of service,
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22. PROVISION AND PERFORMANCE OF TELECOM NETWORKS AND PARTICIPATED IN MEETING OF ITU-T
STUDY GROUP 2 AT GENEVA. SHRI GOYAL HAS DELIVERED A NUMBER OF TALKS ON VARIOUS
TOPICS RELATING TO TELECOM IN VARIOUS FORUMS LIKE GSM ASSOCIATION, INSTITUTE OF
ENGINEERS, INSTITUTE OF ELECTRICAL AND TELECOMMUNICATIONS ENGINEERS, CII, DOOR
DARSHAN AND A.I.R. SOME OF HIS ARTICLES - "TELECOMMUNICATION INDUSTRY AT A GLANCE",
"UNIVERSAL ACCESS - AN INTERNATIONAL PERSPECTIVE" AND "TRADE IN TELECOMMUNICATIONS "
HAVE BEEN PUBLISHED IN TELECOMMUNICATIONS JOURNAL.
DIRECTOR (FINANCE)- SHRI S.D.SAXENA
SHRI S.D.SAXENA WAS APPOINTED DIRECTOR (FINANCE), BSNL ON OFFICIATING BASIS IN
APRIL 2002 AND HAS BEEN WORKING AS DIRECTOR (FINANCE) ON REGULAR BASIS SINCE
29.10.2003. SHRI SAXENA HOLDS AN EXCELLENT ACADEMIC RECORD. HE IS M.SC. (PHYSICS)
AND MBA (FINANCIAL MANAGEMENT). WINNER OF MANY AWARDS AND MEDALS, HE WAS
AWARDED CHANCELLOR'S GOLD MEDAL FOR BEING THE MOST OUTSTANDING STUDENT IN THE
AGRA UNIVERSITY IN THE YEAR 1967. PRIOR TO JOINING THE GOVERNMENT OF INDIA THROUGH
THE IAS, ETC. EXAMINATION OF 1972 HE WAS A LECTURER IN PHYSICS AT THE UNIVERSITY OF
RAJASTHAN AT JAIPUR AND TAUGHT FOR SIX YEARS. DURING THIS PERIOD HE WAS ASSOCIATED
WITH VARIOUS ORGANIZATIONS INCLUDING TATA INSTITUTE OF FUNDAMENTAL RESEARCH
(TIFR) AND ATOMIC ENERGY. AMONG THE NOTABLE ASSIGNMENTS OF SHRI S.D. SAXENA,
SPECIAL MENTION CAN BE MADE OF C-DOT WHERE HE WAS INVOLVED IN SETTING UP OF C-DOT
WITH SHRI SAM PITRODA AND PADMSHRI G.B. MEEMAMSI. HE WAS ALSO DIRECTOR (F) IN THE
E-10 B PROJECT FOR INDUCTION OF ELECTRONIC SWITCHING SYSTEM IN INDIAN TELECOM
NETWORK.
HE WAS IFA OF MAHANAGAR TELEPHONE NIGAM LTD. FOR 7 YEARS AND WAS ACTIVELY
INVOLVED IN THE GDR ISSUE, RATED AS ONE OF THE BEST GDRS BROUGHT OUT BY AN INDIAN
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23. CORPORATE INCLUDING PRIVATE COMPANIES. HE WAS A MEMBER OF RAKESH MOHAN
INFRASTRUCTURE COMMITTEE WHICH MADE SIGNIFICANT RECOMMENDATIONS FOR THE GROWTH
AND DEVELOPMENT OF INDIAN INFRASTRUCTURE SECTOR. SHRI SAXENA HAS BEEN AN ACTING
MEMBER OF THE STUDY GROUP III UNDER THE AEGIS OF INTERNATIONAL TELECOMMUNICATION
UNION. HE WAS THE CHAIRMAN OF THE SPECIAL RAPPORTEUR GROUP OF STUDY GROUP III
FOR TELECOMMUNICATION STATISTICS WHICH MADE SIGNIFICANT CONTRIBUTIONS FOR THE
PRESENTATION OF TELECOM STATISTICS ON A GLOBAL SCALE.
SHRI SAXENA WAS ELECTED CHAIRMAN OF THE TARIFF GROUP FOR ASIA AND OCEANIA
(TAS) GROUP IN THE WORLD TELECOM STANDARDIZATION ASSEMBLY OF ITU HELD IN
FLORIANOPOLIS, BRAZIL.
HE HAS SPECIALISED IN TECHNO-ECONOMIES AND FINANCIAL MANAGEMENT OF TELECOM
COMPANIES WITH EMPHASIS ON TARIFF AND TARIFF BASED MARKETING.
DIRECTOR (PLANNING & NEW SERVICES)-SHRI R.K.AGGARWAL
SHRI RAKESH KUMAR AGARWAL HAS DONE HIS B.E. FROM INDIAN INSTITUTE OF SCIENCE,
BANGALORE IN 1973 AND THEN M.TECH IN COMMUNICATIONS FROM IIT DELHI IN 1975.
THEREAFTER HE JOINED DEPARTMENT OF TELECOMMUNICATIONS AND WORKED IN VARIOUS FIELDS
OF TELECOMMUNICATIONS . HE DID INSTALLATION OF C-400 CROSS BAR EXCHANGES TILL
1983. HE WAS SENT TO FRANCE FOR TRAINING FOR THE INSTALLATION OF DIGITAL ELECTRONIC
EXCHANGE OF E-10B MAKE IN 1983 AND THEREAFTER WORKED AS DEPUTY GENERAL
MANAGER (INSTALLATION) FOR E-10B EXCHANGES IN MTNL, MUMBAI FROM 1983 TILL
1991.
HE WAS DOT REPRESENTATIVE FOR THE SYSTEM SELECTION COMMITTEE SET UP TO FINALIZE
GATEWAY SWITCHES FOR VSNL. DURING 1990 HE REPRESENTED INDIA FOR APT
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24. CONFERENCE IN INDONESIA. HE WAS ALSO DEPUTED AS PROJECT DIRECTOR, TCIL TO
SULTANATE-OF-OMAN FROM 1991 TO 1996 WHERE HE HANDLED ALL THE PROJECTS RELATED
TO SETTING UP THE EXTERNAL PLANT NETWORK FOR COPPER CABLE AND OPTICAL FIBER
NETWORK IN SULTANATE-OF-OMAN. FROM 1996-98 HE WORKED AS CHIEF GENERAL
MANAGER, ANDAMAN & NICOBAR TELECOM CIRCLE AND THEREAFTER HANDLED THE CHARGE OF
JAIPUR TELECOM DISTRICT, RAJASTHAN FROM 1998-99. HE WAS POSTED AS GENERAL
MANAGER (DEVELOPMENT) IN PUNE IN 1999 AND WAS IN CHARGE OF COMPLETE PLANNING AND
INSTALLATION OF ALL SWITCHING AND TRANSMISSION NETWORK IN PUNE DISTRICT. HE WAS ALSO
IN-CHARGE OF COMPUTERIZATION AS WELL AS INTRODUCTION OF NEW SERVICES IN THE NETWORK
IN PUNE.
HE WAS CLOSELY INVOLVED WITH PLANNING, EVALUATION OF TENDER AS WELL AS IMPLEMENTATION
AND MAINTENANCE OF GSM MOBILE SERVICES IN MAHARASHTRA SINCE 2002. AS CHAIRMAN OF
THE VALIDATION COMMITTEE HE SUCCESSFULLY CARRIED OUT THE VALIDATION OF MOBILE SWITCH
FOR WEST ZONE INSTALLED AT PUNE. HE WAS IN-CHARGE OF ALL THE CENTRAL PLATFORMS FOR
GSM MOBILE SERVICES FOR WEST ZONE INSTALLED AT PUNE NAMELY PRE-PAID PLATFORM,
BILLING SYSTEM AND VALUE ADDED SERVICES FOR MOBILE. LATER ON THE FINALIZED EXPANSION OF
MOBILE NETWORK IN WEST ZONE FOR 4 MILLION LINES AND WAS INVOLVED IN THE COMMISSIONING
AND MAINTENANCE OF GSM MOBILE NETWORK. HE WAS ALSO CLOSELY INVOLVED WITH THE
SETTING UP OF CALL CENTRE AT PUNE FOR HANDLING CUSTOMER CARE AND MARKETING OF
MOBILE SERVICES TILL MAY, 2006.IN JUNE, 2006, HE WAS POSTED AS CHIEF GENERAL
MANAGER, BSNL BIHAR TELECOM CIRCLE. HE HAS TAKEN OVER THE CHARGE OF DIRECTOR
(PLANNING & NEW SERVICES) IN BSNL BOARD W.E.F. 11TH APRIL, 2008
PROFILE OF THE COMPANY’S BUSINESS
1. BASIC AND LIMITED MOBILE TELEPHONE SERVICES
BSNL IS THE LEADING SERVICE PROVIDER IN THE COUNTRY IN THE BASIC TELEPHONE SERVICES.
AS OF NOW MORE THAN 35 MILLION DIRECT EXCHANGE LINES & MORE THAN 2.2.MILLION
TELEPHONES IN THE LIMITED MOBILE TELEPHONE SERVICES ARE EXISTING. BSNL HAS PROVIDES A
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25. NUMBER OF ATTRACTIVE TARIFF PACKAGES & PLANS WHICH SHALL FURTHER STRENGTHEN ITS
SUBSCRIBER BASE.
2. CELLULAR MOBILE TELEPHONE SERVICES
BSNL’s GSM Technology based Cellular Mobile Network has reached a long way,
covering more than 6400 towns, with a subscriber base of over 1.54 crore as on
31st Jan. 2009 out of which 1.16 Crore cellular telephones are in the prepaid
segment.
3. INTERNET SERVICES
BSNL offers Dialup Internet services to the customers by Post-paid service with the
brand name ‘Net one’, and pre-paid service with the brand name ‘Sancharnet’. The
post-paid service is a CLI based access service, currently operational in 100 cities.
Sancharnet is available on local call basis throughout India to ISDN and PSTN
subscribers. The Internet Dhaba scheme of the Company aims to further promote
Internet usage in rural and semi urban areas.
To keep pace with the latest and varied value added services to its customers,
BSNL uses IP/MPLS based core to offer world class IP VPN services. MPLS based
VPNs is a very useful service for Corporate, as it reduces the cost involved as well
as the complexity in setting up VPNs for customers networking. As on 31.03.2005,
your Company’s total Internet customer base was 17, 98,089 and total Internet
Dhabas were 4143. A total of 708594 dial up Internet connections have been given
during 2007-2008, against a target of 7 lakhs. BSNL plans to give 1215980 more
dial up connections during the year 2008-09. As on 31.1.2009, there were 2367404
internet subscribers working in BSNL net work.
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26. 4. Intelligent Network
Intelligent Network Services is a service that incorporates several value added
facilities, thoroughly designed to save time and money, and enhance productivity. At
present, your company offers Free Phone (FPH), Premium Rate Service (PRM),
India Telephone Card (ITC), Account Card Calling (ACC), Virtual Private Network
(VPN), Universal Access Number (UAN) and Tele voting IN services. With the
commissioning of five numbers of new technology IN Platforms (Four General
purpose and One Mass Calling) at Kolkata, Bangalore, Ahmadabad and Hyderabad,
the India Telephone Card facility and new value added services are being provided
throughout the country. Activation of these new IN platforms had increased the sale
of ITC Cards taking the figure to Rs.265 crores in 2007-08 alone.
5. BROADBAND SERVICES
BSNL has launched its Broadband Services under the brand NAME ‘DATA One’ on
14/1/2005. This offers services like High Speed Internet Access with speed ranging
from 256 Kbps to 8 Mbps. Other services like streaming video, Video on Demand,
Bandwidth on demand etc., have also been planned. As on 31.12.2005, there were
more than 356000 broad band connection provided by the BSNL. There are plans to
give 2 million and 3 million connections in 2008 and 2009 respectively.
DEVELOPMENT OF RURAL TELECOM NETWORK
1. Rural DELs
AS ON 31.03.2008, IN BSNL’S NETWORK, A TOTAL OF 1.356 CRORE RURAL TELEPHONE
CONNECTIONS WERE WORKING. AS ON 31.1.2009, THERE ARE 1.425 CRORE RURAL TELEPHONES
WORKING IN BSNL NETWORK.

26

27. 2. (a) VILLAGE Public Telephones (VPTs) & RCPs:-
BSNL, in its unstinted efforts to make the slogan ‘Connecting India’, a reality, had
provided VPTs in 5, 18,992 villages up to 31.03.2008. The Company entered into an
agreement with USO Fund for expansion of rural telecom network by November
2009, by providing VPTs in 66,822 undisputed, undisturbed, accessible and
inhabited villages having population more than 100 as per Census, 1991 in the
country. BSNL PROVIDED VPTs in 5, 28,886 villages up to 31.01.2008. There are
plans to replace all MARR VPTs in the COUNTRY. As of now total 123194 MARR
VPTs already replaced in the country by BSNL. BSNL also committed to provide the
Rural Community Phones as per the USO Fund agreement. As of now around
13713 RCPs already provided by BSNL.
(b) Public Telephones:-
There are more than 2 million PCOs working in the BSNL Network out of which
around 1 million PCOs are having STD/ISD.
C. NETWORK MANAGEMENT
BSNL is committed to provide a robust state of the art infrastructure that will provide
stable and superior services to its customers. Accordingly, the MLLN network
covering more than 200 cities was made operational in May 2004. Since then, about
22000 circuits have been provided on this network. This has provided high level of
stability to the leased circuits and capability to offer N X 64 Kbps circuits. Keeping in
view the growing demand of leased circuits, the network is being expanded to cover
about 50 more locations and additional capacity at many existing locations is also
being provided.
27

28. To improve the operational efficiency of CCS 7 signaling, stand-alone signaling
transfer point (SSTP) equipment is being procured. This will also enable the
Company to measure signaling traffic of other operators, who are using its signaling
network for exchanging messages, especially with regard to cellular services. BSNL
has more than 4.7 Lakhs Route Kilometers of optical fiber network in the country &
has installed capacity more than 6.4 million lines for the TAX meant for the STD/ISD
network.
D. Setting up KU Band VSAT network
As regards the KU Band VSAT network equipment, the hub of this network is being
set up at BANGALORE; The equipment has been installed and expected to be
commissioned shortly. This will help your Company, to become a service provider
with all types of media equipment i.e. OFC, Microwave and satellite for provision of
bandwidth, this will also enable the Company to offer composite solutions to its
customers.
E. Policy on transmission network maintenance
TELECOM CIRCLES HAVE LARGE TRANSMISSION NETWORKS. TO IMPROVE THE MAINTENANCE OF
TRANSMISSION NETWORK, GUIDELINES FOR ROUTE PARTIES AND VEHICLES HAVE BEEN FORMALIZED.
TELECOM TERRITORIAL CIRCLES ARE ALSO BEING CONNECTED WITH COMPUTERIZED NETWORK FOR
BOOKING OF TRANSMISSION SYSTEM FAULTS, WITH A VIEW TO IMPROVE FOLLOW UP AND FASTER
RESTORATION OF FAULTS.
F. Annual Maintenance contracts for switching system & WLL
28

29. COMPREHENSIVE AMC, WHICH INCLUDES HARDWARE AND SOFTWARE MAINTENANCE AND UPGRADE,
HAS BEEN ARRANGED WITH THE RESPECTIVE EQUIPMENT SUPPLIERS. INITIAL FEEDBACK SUGGESTS
THAT, AS A RESULT OF PREVENTIVE AND CORRECTIVE MAINTENANCE SUPPORT, THE PERFORMANCE OF
SWITCHES IS IMPROVING. DIFFICULTIES IN ENTERING INTO AMC WITH RURAL WLL EQUIPMENTS
SUPPLIERS HAVE BEEN RESOLVED AND PROCEDURES STREAMLINED SO THAT ADEQUATE MAINTENANCE
SUPPORT BECOMES AVAILABLE. AS A RESULT, THE PERFORMANCE OF WLL NETWORK IS IMPROVING.
AMC ARRANGEMENTS HAVE ALSO BEEN MADE WITH SUPPLIERS OF FWTS AND HAND HELD
TERMINALS.
G. Provision of SMPS with rural WLL DELs
WITH A VIEW TO INCREASE THE TALK TIME AND TO TAKE CARE OF POOR POWER SUPPLY CONDITIONS
IN RURAL AREAS, STEPS ARE TAKEN FOR PROCUREMENT OF SWITCH MODE POWER SUPPLY (SMPS)
WITH 7 AH
BATTERY. ALL NEW PROCUREMENTS OF WLL EQUIPMENT WILL NOW HAVE PROVISIONS FOR SMPS
WITH 7 AH BATTERY TO BE SUPPLIED ALONG WITH FWTS
H. Fault Repair Services –
ACHIEVEMENTS AT A GLANCE (BASIC SERVICE)
SL. NO. PARAMETERS YEAR
2008-09 2009-10
ACHIEVEMENT ACHIEVEMENT
1 FAULT RATE 8.4 7.6
2 TRUNK EFFICIENCY 88.4 89.1
3 CCR
i) LOCAL
ii)JUNCTION
iii)STD
57.85
47.88
40.57
59.89
54.18
43.70
4 FAULT CLEARANCE
29

30. i) SAME DAY
ii)NEXT DAY
iii)WITHIN 7 DAYS
75.78
90.29
98.23
77.30
90.20
98.70
5 REPEAT FAULTS 0.87 0.58
I. COMPUTERISATION
IMPLEMENTATION OF INTER OPERATOR BILLING AND ACCOUNTING SYSTEM (IOBAS) HAS BEEN
COMPLETED. YOUR COMPANY PLANS TO PROVIDE CDR BASED CUSTOMER CARE AND
CONVERGENT BILLING SYSTEM. THIS WILL HELP COMPANY IN PROVIDING EFFECTIVE AND EFFICIENT
BILLING & CUSTOMER CARE SOLUTIONS FOR ITS FIXED LINE SUBSCRIBERS. IT ENVISAGES BUILDING
OF COUNTRY WIDE INTRANET TO REDUCE THE COST OF OPERATION, INCREASE REALIZATION, STOP
LEAKAGE OF REVENUE AND MINIMIZE FRAUDS, BESIDES PROVIDING ROUND THE CLOCK BEST
CUSTOMER CARE SERVICES TO THE COMPANY’S SUBSCRIBERS.
CALL CENTER FACILITY HAS BEEN INTRODUCED FOR 71 SSAS, WHICH IS A SINGLE POINT
APPROACH FOR ADDRESSING ALL CUSTOMER NEEDS CUM GRIEVANCES. WEB BASED PUBLIC
GRIEVANCE MANAGEMENT SYSTEM HAS BEEN IMPLEMENTED FOR SPEEDY DISPOSAL AND MONITORING
OF PUBLIC GRIEVANCES. WEB BASED INVENTORY MANAGEMENT PACKAGE HAS ALSO BEEN
INTRODUCED, THROUGH WHICH; MATERIAL MANAGEMENT FUNCTIONS ARE BEING COMPUTERIZED
GRADUALLY IN DIFFERENT CIRCLES. ONLINE MOBILE BILL VIEWING FACILITY HAS BEEN MADE
AVAILABLE TO ALL CELL ONE MOBILE CUSTOMERS (ALL STATES) THROUGH COMPANY’S PORTAL
(HTTP://BSNL.IN). DUPLICATE TELEPHONE BILL VIEWING FACILITY FOR LANDLINE TELEPHONE HAS
ALSO BEEN MADE AVAILABLE AT MANY PLACES THROUGH WEBSITES OF RESPECTIVE TELECOM
CIRCLES.
J. BUSINESS DEVELOPMENT
BSNL IS OFFERING CUSTOMIZED ENTERPRISE NETWORK SOLUTION AND SERVICES TO THE
CORPORATE CUSTOMERS ON TURNKEY BASIS. THE COMPANY HAS EMPANELLED SYSTEM
INTEGRATORS AS BUSINESS ASSOCIATES TO IMPLEMENT THE WAN SOLUTION THROUGH LEASED
30

31. LINE/ MPLS. YOUR COMPANY HAS PROVIDED BANDWIDTH FOR WAN NETWORK OF CORPORATE
LIKE SBI, PNB, ICICI, HPCL ETC. SOME OF THE WORKS WERE AWARDED TO BSNL AFTER
COMPETITIVE BID.
BSNL HAS ALSO ENTERED INTO MOUS WITH A NUMBER OF LEADING CORPORATE SUCH AS
NTPC, BPCL, UNION BANK OF INDIA (UBI), INDIAN AIRLINES (IAL), IFFCO, MCX, PNB
IN THE YEAR 2008-2009 FOR PROVIDING TOTAL TELECOM SOLUTION AND FOR HAVING SYNERGY OF
OPERATION WITH THESE ORGANIZATIONS.
EPABX MANUFACTURERS HAVE BEEN EMPANELLED TO PROVIDE “FREE OF COST EPABX
SYSTEMS” TO CORPORATE CUSTOMERS AS A BUSINESS DEVELOPMENT INITIATIVE TO RETAIN THE BIG
CORPORATE SUBSCRIBERS. AN EXCLUSIVE AGREEMENT HAS BEEN SIGNED WITH RAILTEL, TO
PROVIDE TELECOM SERVICE ON REVENUE SHARE BASIS BY CALL CENTRE’S, FOR CENTRALIZED
ENQUIRY FOR RAILWAYS. FURTHERMORE, YOUR COMPANY HAS ENTERED INTO AN AGREEMENT FOR
UTILIZING PRASAR BHARTI AND RAILTEL’S TOWERS FOR INSTALLING THE GSM ANTENNAS FOR
FASTER ROLLOUT OF GSM NETWORK.
K. INTERNATIONAL LONG DISTANCE (ILD)
SUBSEQUENT TO THE SIGNING OF MOU WITH SRI LANKA TELECOM (SLT), MICROWAVE LINK
BETWEEN INDIA AND SRI LANKA HAS BEEN COMMISSIONED. BSNL HAS STARTED ITS DIRECT ILD
SERVICES TO SRI LANKA UTILIZING THIS MICROWAVE LINK, WHICH WAS LAUNCHED BY HON’BLE
MOC AT CHENNAI ON 16TH OCTOBER 2009.
INTERNATIONAL SERVICE AGREEMENTS FOR ILD TRAFFIC WITH LEADING INTERNATIONAL CARRIERS
VIZ. TELEGLOBE CANADA, TELECOM ITALIA, MCI USA, SRI LANKA TELECOM, SINGTEL OPTUS,
FRANCE TELECOM ETC., HAVE BEEN SIGNED. IN THE FIRST PHASE, OUTBOUND ILD TRAFFIC IS
BEING SENT THROUGH THESE CARRIERS.
31

32. BSNL HAS ALSO PLANNED TO LAY THE UNDERSEA SUBMARINE CABLE BETWEEN SRI LANKA AND
INDIA. THE LANDING STATION FOR SUBMARINE CABLE HAS BEEN IDENTIFIED AS TUTICORIN
(TAMILNADU). THIS CABLE WILL PROVIDE CONNECTIVITY TO OTHER INTERNATIONAL CABLE SYSTEM
FOR CARRYING VOICE & DATA TRAFFIC.
BSNL IS UPGRADING ITS 4 LEVEL-I TAXS I.E., MUMBAI, CHENNAI, NEW DELHI, KOLKATA, TO
INTERNATIONAL GATEWAY CAPABILITY ALONG WITH THE SETTING UP OF MONITORING FACILITY AT
THESE STATION.
L. CUSTOMER CARE
BSNL, WITH ITS ENDEAVOUR FOR HIGH CUSTOMER SATISFACTION, HAS BEEN PAYING GREAT
ATTENTION IN THIS AREA, BY MEANS OF OPENING OF MORE AND MORE CUSTOMER SERVICE CENTERS.
IN ITS ONGOING ENDEAVOUR TO EXPAND MODES OF BILL PAYMENT OPTIONS FOR ITS CUSTOMERS,
SEVERAL NEW ARRANGEMENTS ARE IN ADVANCED STAGE OF
NEGOTIATION/FINALIZATION/IMPLEMENTATION. SOME OF THESE INCLUDE: RECHARGE OF EXCEL PRE-
PAID CARDS THROUGH THE ATMS OF PNB AND SBI; BILL PAYMENT THROUGH M/S EASY BILL
RETAIL OUTLETS PRESENTLY AVAILABLE AT BANGALORE, GURGAON AND NOIDA LIKELY TO BE
EXPANDED TO OTHER CITIES; PAYMENT THROUGH INTERNET/ECS USING THE SERVICES OF
INTERMEDIARIES M/S BILL DESK AND M/S BILL JUNCTION RESPECTIVELY, AND, THROUGH
CREDIT/DEBIT CARDS.
M. TELECOM FACTORIES
THE TELECOM FACTORIES OF BSNL LOCATED AT KOLKATA, GOPALPUR, KHARAGPUR, JABALPUR,
RICHHAI, BHILAI AND MUMBAI ARE IN-HOUSE MANUFACTURING UNITS CURRENTLY ENGAGED IN
32

33. PRODUCTION OF PAY PHONES, MINI PILLAR, CT BOX, DP BOX, LINE JACK UNIT, TOWERS AND
SS DROP WIRE, OFC ACCESSORIES, FDMS ETC. DURING 2008-09,
WITH A VIEW TO USE THE FACTORIES INFRASTRUCTURE AND WORKFORCE GAINFULLY, EFFORTS ARE
BEING MADE TO TIE UP WITH OTHER TECHNOLOGY PROVIDERS ETC.
N. OBLIGATIONS
1. Towards customers and dealers
TO PROVIDE PROMPT, COURTEOUS AND EFFICIENT SERVICE AND QUALITY OF PRODUCTS/SERVICES AT
FAIR AND REASONABLE SERVICES.
2. Towards employees
DEVELOP THEIR CAPABILITY AND ADVANCEMENT THROUGH APPROPRIATE TRAINING AND
CAREER PLANNING
EXPEDITIOUS REDRESSAL OF GRIEVANCES
FAIR DEALINGS WITH RECOGNIZED REPRESENTATIVES OF EMPLOYEES IN PURSUANCE OF
HEALTHY TRADE UNION PRACTICES AND SOUND PERSONNEL POLICIES
3. Towards the Society –Corporate Social Responsibilities
CORPORATE SOCIAL RESPONSIBILITIES
BSNL IS COMMITTED TO PROVIDE QUALITY TELECOM SERVICES AT AFFORDABLE PRICE TO THE
CITIZENS OF THE REMOTEST PART OF THE COUNTRY. BSNL IS MAKING ALL EFFORT TO ENSURE
33

34. THAT THE MAIN OBJECTIVES OF THE NEW TELECOM POLICY 1999 (SALIENT POINTS INDICATED
BELOW) ARE ACHIEVED:
ACCESS TO TELECOMMUNICATIONS IS OF UTMOST IMPORTANCE FOR ACHIEVEMENT OF THE
COUNTRY'S SOCIAL AND ECONOMIC GOALS. AVAILABILITY OF AFFORDABLE AND EFFECTIVE
COMMUNICATIONS FOR THE CITIZENS IS AT THE CORE OF THE VISION AND GOAL OF THE NEW
TELECOM POLICY 1999.
STRIVE TO PROVIDE A BALANCE BETWEEN THE PROVISION OF UNIVERSAL SERVICE TO ALL
UNCOVERED AREAS, INCLUDING THE RURAL AREAS, AND THE PROVISION OF HIGH-LEVEL SERVICES
CAPABLE OF MEETING THE NEEDS OF THE COUNTRY'S ECONOMY ENCOURAGE DEVELOPMENT OF
TELECOMMUNICATION FACILITIES IN REMOTE, HILLY AND TRIBAL AREAS OF THE COUNTRY;
TRANSFORM IN A TIME BOUND MANNER, THE TELECOMMUNICATIONS SECTOR TO A GREATER
COMPETITIVE ENVIRONMENT IN BOTH URBAN AND RURAL AREAS PROVIDING EQUAL OPPORTUNITIES
AND LEVEL PLAYING FIELD FOR ALL PLAYERS.
N. Employee’s Welfare Activities
COMMITMENT TOWARDS THE PRINCIPLES OF CORPORATE SOCIAL RESPONSIBILITIES IS INBUILT WITHIN
THE CORPORATE PHILOSOPHY OF BSNL. A VERY WIDE RANGE OF WELFARE PROGRAMMES, WITH A
FOCUS ON THE EMPLOYEES’ WELFARE IS CONTINUOUSLY IMPLEMENTED BY THE STAFF WELFARE
BOARD OF THE COMPANY.
O. Assistance during natural calamities
BSNL ALWAYS REMAINS AWAKE OF ITS RESPONSIBILITY AS A CORPORATE CITIZEN. WHEN THE
DESTRUCTIVE TSUNAMI WAVES STRUCK THE INDIAN SHORES, BSNL COMPANY SWUNG INTO ACTION
34

35. IMMEDIATELY FOR PROVIDING RELIEF TO THOSE AFFECTED IN THE COASTAL AREAS. COMMUNICATION
NETWORKS AT THE COASTAL AREAS OF TAMIL NADU, KERALA AND THE ANDAMAN AND NICOBAR
ISLANDS – WORST HIT IN THE TSUNAMI - WERE PROMPTLY RESTORED WITHIN THE SHORTEST
POSSIBLE TIME. BSNL ALONG WITH THE EMPLOYEES CONTRIBUTED AN AMOUNT OF RS. 2,207
LAKHS TO THE PRIME MINISTER’S RELIEF FUND. TELEPHONE SERVICES WERE RESTORED IN
RECORD TIME IN THE FLOOD-HIT AREAS OF GUJARAT AND MAHARASHTRA.
1.2 POWERS & DUTIES OF OFFICERS AND WORKMEN
THE POWERS & DUTIES OF THE OFFICERS AND WORKMEN OF THE COMPANY ARE DERIVED MAINLY
FROM JOB DESCRIPTIONS, MANUALS, TERMS AND CONDITIONS OF APPOINTMENT AND DELEGATION OF
AUTHORITIES ENUNCIATED BY THE COMPANY. THE WORKMEN OF THE COMPANY ARE APPOINTED
FOR CARRYING OUT THE BUSINESS OPERATIONS OF THE COMPANY, WHICH ARE IN LINE WITH THE
OBJECTIVES SPECIFIED IN THE MEMORANDUM OF ASSOCIATION OF THE COMPANY.
WHILE DISCHARGING DUTIES AND RESPONSIBILITIES, OFFICERS & WORKMEN OF THE COMPANY ARE
COMPLYING WITH THE APPLICABLE PROVISIONS OF STATUTES AND RULES AND REGULATIONS FRAMED
THERE UNDER
1.3 PROCEDURES FOLLOWED IN THE DECISION-MAKING PROCESS,
INCLUDING CHANNELS OF SUPERVISION AND ACCOUNTABILITY
The decisions making process of the Company follows the
following Channel
BOARD OF DIRECTORS
35

36. CHAIRMAN AND MANAGING DIRECTOR
1.4 THE NORMS SET FOR DISCHARGE OF FUNCTIONS
THE COMPANY HAS WELL DEFINED PROCEDURES AND GUIDELINES IN THE FORM OF DELEGATION OF
POWERS, LAID DOWN POLICIES AND GUIDELINES, MANUALS WITH A VIEW TO ENSURE COMPLIANCE OF
PROVISIONS OF VARIOUS STATUTES, RULES AND REGULATIONS AND THE GUIDELINES OF DEPARTMENT
OF PUBLIC ENTERPRISES, CENTRAL VIGILANCE COMMISSION AND OTHER CONCERNED
ORGANIZATIONS.
1.5 THE RULES, REGULATIONS, INSTRUCTIONS, MANUALS AND
RECORDS HELD BY THE COMPANY OR UNDER ITS CONTROL OR USED
BY ITS EMPLOYEES FOR DISCHARGE OF FUNCTIONS
THE OVERALL OBJECTIVES AND FRAMEWORK OF RULES AND REGULATIONS OF THE COMPANY IS LAID
DOWN IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY. EACH
DEPARTMENT OF THE COMPANY, WHILE DISCHARGING ITS FUNCTIONS, IS GUIDED BY MANUALS,
POLICY AND GUIDELINES, WHICH ARE PERIODICALLY REVIEWED AND UPDATED.
MOST OF GROUP AN OFFICERS OF VARIOUS ORGANIZED CENTRAL SERVICES ARE ON DEEMED
DEPUTATION WITH THE COMPANY, WHO ARE GOVERNED BY THE RULES AND REGULATIONS OF THE
CENTRAL GOVERNMENT. SO FAR THE ABSORBED EMPLOYEES ARE CONCERNED, AT PRESENT,
EXCEPT FOR THE RULES MADE BY THE BSNL; BROADLY, THEY ARE GOVERNED BY THE RULES AND
REGULATIONS OF THE CENTRAL GOVERNMENT.
1.6.DOCUMENTS THAT ARE HELD BY THE COMPANY OR UNDER ITS
CONTROL
36

37. THE COMPANY MAINTAINS VARIOUS STATUTORY DOCUMENTS, REGISTERS, BOOKS, LICENSES,
MANUALS, AND AGREEMENTS ETC. FOR THE BUSINESS OPERATION OF THE COMPANY, AS
REQUIRED UNDER VARIOUS STATUTES, RULES AND REGULATIONS AS WELL AS FOR THE SMOOTH
FUNCTIONING OF THE COMPANY.
1.7. PARTICULARS OF ARRANGEMENT FOR CONSULTATION WITH THE
MEMBERS OF THE PUBLIC IN RELATION TO THE FORMULATION OF
POLICY OR IMPLEMENTATION THEREOF
BHARAT SANCHAR NIGAM LIMITED IS A COMMERCIAL ORGANIZATION AND POLICIES
FORMULATED BY IT RELATE TO ITS INTERNAL MANAGEMENT AND THEREFORE, THERE IS NO
REQUIREMENT FOR CONSULTATION WITH THE MEMBERS OF THE PUBLIC PRIOR TO FORMULATION OF
ITS INTERNAL POLICIES. HOWEVER, INTERNAL POLICIES OF THE COMPANY ARE FORMULATED IN
COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE STATUTES, RULES AND REGULATIONS ETC.
THE MEMBERS OF THE PUBLIC, WHO ARE DEALING WITH THE COMPANY IN ITS BUSINESS
TRANSACTION HAVE ANY COMPLAINTS/ GRIEVANCES, THEY CAN APPROACH THROUGH E-MAIL OR
THROUGH THE CONCERNED OFFICERS FOR REDRESSAL AS HOSTED IN THE WEB-SITE
WWW.BSNL.CO.IN .
1.8 STATEMENT ON THE BOARD & SUB COMMITTEES OF THE BOARD
AND OTHER COMMITTEES
THE MANAGEMENT OF THE COMPANY IS VESTED WITH THE BOARD OF DIRECTORS. IN TERMS OF
THE ARTICLES OF ASSOCIATION OF THE COMPANY, THE BOARD OF DIRECTORS CAN HAVE MINIMUM
THREE DIRECTORS AND MAXIMUM FIFTEEN DIRECTORS. AT PRESENT, THERE ARE SIX WHOLE TIME
FUNCTIONAL DIRECTORS INCLUDING THE CHAIRMAN CUM MANAGING DIRECTOR, ONE PART-TIME
GOVERNMENT NOMINEE DIRECTOR.
37

38. THE MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD ARE NOT
ACCESSIBLE FOR PUBLIC. SIMILARLY THE MINUTES BOOKS OF THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD ARE NOT OPEN FOR INSPECTION BY PUBLIC.
FOR DETAILS OF THE NAMES, DESIGNATIONS AND TELEPHONE NUMBERS OF THE SENIOR
OFFICER'S OF THE PUNJAB TELECOM CIRCLE, PLEASE REFER TO THE COMPANY’S WEBSITE
BHARAT SANCHAR NIGAM LIMITED DOES NOT HAVE ANY DIRECT SUBSIDY SCHEMES / PROGRAMMES
FOR PUBLIC. HOWEVER, BSNL IS OFFERING CONCESSIONAL TARIFF FOR RURAL SUBSCRIBERS WITH
LOWER RENTAL AND HIGHER FREE CALLS AS COMPARED TO URBAN AREAS. THE DETAILS OF
COMPARATIVE TARIFF IS AS UNDER:
MONTHLY RENTAL CHARGES FOR B-FONE
(BASED ON EXCHANGE-SYSTEM CAPACITY)
Exchange Capacity
GENERAL PACKAGE OFFERED
BY BSNL
STANDARD PACKAGE OF
TRAI
RURAL RURAL
LESS THAN 1000 LINES RS. 50 RS. 70
> 1000 LINES < 30000 LINES RS. 110 RS. 120
> 30000 LINES < 100000
LINES
RS. 150 RS. 200
100000 LINES & ABOVE RS. 210 RS. 280
1.9 DIRECTORY OF OFFICERS & WORKMEN
BHARAT SANCHAR NIGAM LIMITED EMPLOYEE STRENGTH AS ON 31.3.2005 IS 339853.
GROUPS B, C AND D LEVEL EMPLOYEES OF THE ERSTWHILE DEPARTMENTS OF
38

39. TELECOMMUNICATIONS HAVE ALREADY BEEN PERMANENTLY ABSORBED IN THE SERVICES OF THE
COMPANY. OFFICERS OF VARIOUS ORGANIZED GROUP A SERVICES, THE MOST OF THEM ARE ON
DEEMED DEPUTATION TO THE COMPANY.
AS PER THE 20TH AMENDMENT (4 OF 2002) TO TTO’99 DATED 14.3.2002, THE TELECOM
REGULATORY AUTHORITY OF INDIA (TRAI) HAD RECOMMENDED RATIONALISATION OF RENTAL FOR
RURAL SUBSCRIBERS BASED ON THE EXCHANGE SYSTEM CAPACITY OF THE ENTIRE SDCA ON LINES
OF URBAN SUBSCRIBERS. HOWEVER, FOR THE BENEFIT OF RURAL SUBSCRIBERS BSNL CONTINUES
TO CHARGE TARIFF FROM RURAL SUBSCRIBERS ON THE BASIS OF THE CAPACITY OF EXCHANGE
SYSTEM AS IT EXISTED PRIOR TO 15-8-1998, I.E. BEFORE THE LOCAL CALL AREA BECAME CO-
TERMINUS WITH THE SHORT DISTANCE CHARGING AREA (SDCA), WITH ALL SUBSEQUENT
AUGMENTATIONS TAKEN INTO ACCOUNT.
1.10ANNER OF EXECUTION OF SUBSIDY PROGRAMMES, INCLUDING THE
AMOUNTS ALLOCATED AND THE DETAILS OF BENEFICIARIES OF
SUCH PROGRAMMES.
BSNL is extending rebate in rentals, registration, installation of phones etc to certain
category of subscribers as detailed here under:
1.11PARTICULARS OF RECIPIENTS OF CONCESSIONS, PERMITS OR
AUTHORISATIONS GRANTED BY THE COMPANY.
Bharat Sanchar Nigam Limited does not grant any concession, permits or
authorization, except for appointing franchises and agents for sale of its services like
PCO holders, franchises for BSNL services etc.
39

40. Category of person
REBATE/CONCESSION
Senior citizens of the age of 65
years and above
I) REGISTRATION OF ONE TELEPHONE UNDER NON-OYT
SPECIAL
CATEGORY WHICH IS PRIORITY CATEGORY.
II) NO REGISTRATION CHARGES.
Visually blind persons
I) REGISTRATION OF ONE TELEPHONE UNDER NON-OYT
SPECIAL
CATEGORY.
II) 50% REBATE IN NORMAL RENTAL CHARGES
III) 50% REBATE IN ANNUAL ADVANCE RENTALS
Freedom fighters/ widows of
freedom fighters getting pension
under freedom fighter pension
scheme
I) REGISTRATION OF ONE TELEPHONE UNDER NON-OYT-
SWS CATEGORY
II) NO REGISTRATION CHARGES.
III) NO INSTALLATION CHARGES.
IV) 50% REBATE IN NORMAL RENTAL CHARGES
Gallantry Award winners
(Defense services) under
following categories-
Param Vir Chakra
Ashok Chakra
Kirti Chakra
Vir chakra
Shaurya Chakra
I) REGISTRATION OF ONE TELEPHONE UNDER NON-OYT
SPECIAL CATEGORY
II) NO REGISTRATION CHARGES.
III) NO INSTALLATION CHARGES.
IV) NO RENTAL CHARGES
War widows/Disabled soldiers
I) REGISTRATION OF ONE TELEPHONE UNDER NON-OYT
SPECIAL
CATEGORY.
II) NO REGISTRATION CHARGES.
III) 50% REBATE IN NORMAL RENTAL CHARGES
IV) NO INSTALLATION CHARGES
Awardees of President’s Police
medal for gallantry and widows of
I) REGISTRATION UNDER NON-OYT SPECIAL CATEGORY
II) NO REGISTRATION CHARGES.
40

41. awardees conferred such award
posthumously.
III) NO INSTALLATION CHARGES.
IV) NO RENTAL CHARGES
1.12 DETAILS OF INFORMATION AVAILABLE OR HELD IN ELECTRONIC
FORM
THE INFORMATION RELATING TO COMPANY PROFILE / BUSINESS, PRODUCTS, SERVICES, FINANCIAL
PERFORMANCE, SHAREHOLDING PATTERN ETC. IS AVAILABLE IN ELECTRONIC FORM, WHICH CAN BE
OBTAINED FROM THE WEBSITE OF THE COMPANY FROM CHAPTERS I IN THIS MANUAL AND ALSO FROM
ITS PUBLIC PORTAL WWW.BSNL.CO.IN .
1.15 PARTICULARS OF FACILITIES AVAILABLE TO CITIZENS FOR
OBTAINING INFORMATION.
BSNL IS MAINTAINING A CORPORATE WEBSITE WITH NAME WWW.BSNL.CO.IN CITIZENS DESIROUS OF
OBTAINING INFORMATION MAY VISIT THE WEBSITE. MOST OF THE INFORMATION OF THE PUBLIC
CONSUMPTION IS HOSTED PARTICULARLY VARIOUS SERVICES TARIFF PLANS & LINKS TO ITS
SUBORDINATE UNITS WEBSITES. THE LIST OF INFORMATION OFFICERS I.E. UNDER THE RIGHT TO
INFORMATION ACT CAN ALSO BE HAD FROM SECTION BSNL U NITS WEBSITE FROM
WWW.BSNL.CO.IN WEBSITE.( BSNL UNITS WEBSITES ARE LINKED TO MAIN CORPORATE OFFICE
WEB SITE).
1.16 NAMES, DESIGNATION AND OTHER PARTICULARS OF CENTRAL
PUBLIC INFORMATION OFFFICERS.
IN TERMS OF SECTION 5 (1) OF THE RIGHT TO INFORMATION ACT, 2005, THE COMPANY HAS
DESIGNATED VARIOUS OFFICIALS AS INFORMATION OFFICERS (APIOS & PIOS) AND APPELLATE
AUTHORITIES. THE LIST OF SUCH OFFICERS IS AVAILABLE AT THE PUNJAB TELECOM CIRCLE
WEBSITE WWW.PUNJAB.BSNL.CO.IN/ROIPUNJAB.HTM THE CONCERN DESIGNATED APIOS, PIO,S
CAN BE APPROACHED FOR GETTING THE INFORMATION AS PURSUANT TO THE RTI ACT 2005 AT
VARIOUS PLACES
41

42. 1.BSNL: A FINANCIAL OVERVIEW

2.1:-FINANCIAL ANALYSIS OF BSNL
2.2:-INCOME, EXPENDITURE AND PROFIT:
2.3:-ACCOUNTING POLICIES
FINANCE PROFILE
42

BHARAT SANCHAR NIGAM LIMITED, THE LARGEST PUBLIC SECTOR UNDERTAKING OF THE
NATION, IS CERTAINLY ON A FINANCIAL GROUND THAT'S SOUND.
THE COMPANY HAS A NET WORTH OF RS. 88,128 CRORES (US$ 22.02 BILLION), AUTHORIZED
EQUITY CAPITAL OF RS. 10,000 CRORES (US $ 2.50 BILLION), PAID UP EQUITY SHARE
CAPITAL OF RS. 5,000 CRORES (US $ 1.25 BILLION) AND REVENUES IS RS. 38053 CRORES
(US $ 9.51 BILLION) IN 2008-09.

43. 2.1Financial Analysis of BSNL:-
ON OCTOBER 1ST, 2000, BSNL WAS FORMED BY CONVERTING SERVICE PROVIDING FUNCTIONS
OF ERSTWHILE DOT TO PROVIDE LEVEL PLAYING FIELD TO PRIVATE TELECOMS. SINCE THEN
BSNL HAS EMERGED AS THE 7TH LARGEST TELECOM OPERATING COMPANY IN THE WORLD.
BSNL HAS PLAYED MAJOR ROLE IN SPREADING TELEPHONES TO RURAL AREAS OF THE COUNTRY AT
AFFORDABLE RATES. AS PER TRAI REPORT “5.3 LAKH VILLAGES HAVE BEEN PROVIDED ACCESS TO
TELECOM NETWORK THROUGH VPTS COVERING 87% OF THE VILLAGES. MOST OF THE VPTS
HAVE BEEN PROVIDED BY BSNL. BSNL HAS PROVIDED 13.59 MILLION (JULY 2005) RURAL
DELS IN THE COUNTRY”. BY THIS STATEMENT WE CAN JUDGE THE IMPORTANT ROLE PLAYED BY
BSNL RIGHT FROM ITS INCEPTION.
2.2Income, Expenditure and Profit:
FOLLOWING TABLE SHOWS INCOME, EXPENDITURE AND PROFIT FIGURES OF BSNL FOR THE 5
YEAR PERIOD SINCE ITS INCEPTION.
TABLE
S.
NO.
YEAR INCOME
(Rs. in Crores)
EXPENDITURE
(Rs. in Crores)
PROFIT
BEFORE TAX
(Rs. In Crores)
PROFIT
AFTER TAX
(Rs. In Crores)
1 1.10.2005
TO
31.3.2006
11699 10669 1030 747
2 2007 24681 20461 4220 6312
43

44. 3 2008 25892 25078 8136 1444
4 2009 33918 27163 6755 5976
5 2010 36090 29401 6689 10183
Government has set ambitious targets for Telecom PSUs (MTNL and BSNL) for
providing a total of 12.50 CRORE TELEPHONES BY DECEMBER 2012 WITH A TARGETED MARKET
SHARE OF 50%. HOWEVER OVERALL MARKET SHARE OF BOTH PSUS, WHICH WAS MORE THAN
85 % AT THE TIME OF BSNL FORMATION, HAS DECLINED TO LESS THAN 37% AS ON DATE. IN THE
FINANCIAL YEAR 2009-10, THE REVENUE FROM 9,447,357 CELLULAR SUBSCRIBERS (AS ON
MARCH 31, 2010) STANDS AT 10.5% OF THE TOTAL REVENUE. LESS THAN 1% REVENUE CAME
FROM WLL SERVICES. WE GOT 44.68 % INCOME FROM BASIC TELEPHONE SERVICES WHILE
PCO BUSINESS GAVE ANOTHER 17.34 % OF THE INCOME. REVENUE FROM BASIC SERVICES
DURING 2001-05 WAS RS 23,080 CRORE, RS 21,545 CRORE, RS 23,954 CRORE, AND RS
22,385 CRORE. IN THE FINANCIAL YEAR 2009-10, THE REVENUE FROM 35,859,482 BASIC
SUBSCRIBERS (AS ON MARCH 31, 2010) IS 62% OF THE TOTAL REVENUE.
IN THE LAST 4 YRS, BSNL HAS RECEIVED RS 15,701 CRORE AS COMPENSATION FOR
MAINTENANCE OF VPT, ADC, AND IUC, WHICH IS 85% OF BSNL’S CUMULATIVE PROFIT
BEFORE TAX OF RS 18,477 CRORE DURING THE SAME PERIOD. BSNL HAS RECEIVED 100%
REIMBURSEMENT OF LICENSE FEE FROM 2006-07 TO 2007-08. FOR 2008-09, THE
REIMBURSEMENT OF LICENSE FEE IS RESTRICTED TO 2/3RD OF LICENSE FEE PAID WHICH WILL BE
FURTHER RESTRICTED TO 1/3RD IN 2009-10. THEREAFTER, REIMBURSEMENT WILL BE NIL. IN THE
LAST 4 YRS BSNL HAS RECEIVED TOTAL LICENSE FEE REFUND OF RS 8,665 CRORE (BSNL
PAID RS 15,498 CRORE AS LICENSE FEES) AS A COMPENSATION FOR PROVIDING TELECOM
SERVICES IN RURAL AREAS.
THE TOTAL INCOME OF BSNL FOR THE FINANCIAL YEAR 2004-05 IS RS 36,090 CRORE AND
PROFIT BEFORE TAX (PBT) IS RS 6,688 CRORE WHICH IS ALMOST EQUAL TO ITS IUC OF RS
6,035 CRORE. BSNL WILL HAVE TO PAY INCOME TAX ON 70% OF ITS PROFITS AND ONLY 30%
WOULD BE EXEMPTED. IN THE ABSENCE OF SUCH EXEMPTION FROM THIS YEAR, BSNL WILL HAVE
TO RESORT TO BORROWING RESULTING IN SUBSTANTIAL INTEREST BURDEN.
44

45. BSNL’S EXPENSES ON STAFF HAVE SHOT-UP BY 218.75% IN THE LAST FOUR YEARS FROM RS
3,848 CRORE IN 2001-02 TO RS 8,418 CRORE IN 2004-05. FOR THE FINANCIAL YEAR
2004-05, EXPENSES ON STAFF ARE 28.63% OF THE TOTAL EXPENSES. SIMILARLY, THE
ADMINISTRATION AND OPERATIONAL COSTS HAVE ALSO INCREASED BY 199% FROM RS 3,995
CRORE IN 2001-02 TO RS 7,951 CRORE IN 2004-05. FOR THE FINANCIAL YEAR 2004-05,
EXPENSES ON ADMINISTRATION AND OPERATION ARE 27.05% OF THE TOTAL EXPENSES.
TOGETHER THESE TWO EXPENSES ARE 55.68% OF THE TOTAL EXPENSES IN 2004-05.
BSNL AS A BUSINESS ENTITY HAS PERFORMED WELL SO FAR EVEN THOUGH THERE ARE SOME
DISTURBING TRENDS ALSO LIKE BIG INCREASE ON STAFF COST AND ADMINISTRATIVE EXPENDITURE.
BSNL’S STAFF COST IS HIGHEST AMONG INDUSTRY BARRING ONLY TO MTNL. WHILE INDUSTRY
AVERAGE OF STAFF COST IS ABOUT 4-6 % OF AGR SAME FIGURE FOR BSNL IS MORE THAN 25
%. DESPITE ALL CONSTRAINS OF THE LEGACY NETWORK AND LARGE STAFF OVERALL PERFORMANCE
OF BSNL IS SATISFACTORY. BSNL DOES NOT HAVE SUBSTANTIAL DEBT SO OUT GO ON THE PART
OF INTEREST PAYMENT IS SMALL. BSNL’S PERFORMANCE IN MOBILE BUSINESS IS AVERAGE.
BSNL STARTED GETTING MORE THAN 10 % OF ITS REVENUE FROM THIS SEGMENT AT THE END OF
YEAR 2005. MORE EFFORTS ARE REQUIRED ON THIS FRONT. BROADBAND IS OTHER PROMISING
AREA WHERE LOT OF EFFORTS IS REQUIRED. MARKETING OF SERVICES IS NOT UP TO THE MARK AND
SOME SERIOUS STEPS NEEDS TO BE TAKEN IN THIS AREA BECAUSE CUSTOMER ACQUISITION AND
RETENTION IS OF PRIME IMPORTANCE IN THE HIGHLY VOLATILE TELECOM MARKET PLACE WHERE HIGH
CHURNING AND LOW CUSTOMER LOYALTY ARE THE CHARACTERISTICS. DESPITE ALL THIS GROWTH IN
THE TELECOM SECTOR THE DIGITAL DIVIDE IS CONTINUOUSLY INCREASING. GAP BETWEEN URBAN
TELE-DENSITY AND RURAL TELE-DENSITY IS WIDENING. PRIVATE PLAYERS ARE LESS INTERESTED IN
HIGH INVESTMENT ORIENTED AND LOW RETURN PAYING RURAL INDIA BUT FOR BSNL THERE IS A BIG
OPPORTUNITY HERE BECAUSE BSNL ALREADY HAS A LARGE NETWORK OF MORE THAN 36000
DIGITAL EXCHANGES CONNECTED BY OFC BACKBONE. BSNL CAN HARP ON ITS EXISTING
INFRASTRUCTURE TO POSITION ITSELF AS FORMIDABLE PLAYER.

45

46. 2.3 ACCOUNTING POLICIES
(SCHEDULE T)
2.3 .1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
THE FINANCIAL STATEMENTS OF BHARAT SANCHAR NIGAM LIMITED (THE “COMPANY” OR “BSNL”)
ARE
PREPARED UNDER THE HISTORICAL COST CONVENTION ADOPTING THE ACCRUAL METHOD OF
ACCOUNTING IN
ACCORDANCE WITH INDIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND IN ACCORDANCE
WITH THE
PROVISIONS OF THE COMPANIES ACT, 1956 (THE “ACT”).
2.3 .2 REVENUE RECOGNITION
INCOME FROM SERVICES IS ACCOUNTED FOR ON ACCRUAL BASIS AND IN CONFORMITY WITH
ACCOUNTING STANDARD – 9 OF ICAI. ACCORDINGLY,
A) \ REVENUE FOR ALL SERVICES IS RECOGNIZED WHEN EARNED AND ARE REALIZABLE AT THE
TIME OF BILLING. UNBILLED REVENUES FROM THE BILLING DATE TO THE END OF THE YEAR ARE
RECORDED AS ACCRUED REVENUE DURING THE PERIOD IN WHICH THE SERVICES ARE PROVIDED.
PROVISION IS MADE IN RESPECT OF BILLS CONSIDERED TO BE DISPUTED (BY THE MANAGEMENT),
DEBTS OUTSTANDING FOR MORE THAN TWO YEARS AND FOR DEBTS DUE FOR LESS THAN 2 YEARS,
TO THE EXTENT CONSIDERED NECESSARY BY THE MANAGEMENT.
46

47. B) INSTALLATION CHARGES RECOVERED FROM SUBSCRIBERS AT THE TIME OF NEW TELEPHONE
CONNECTIONS ARE RECOGNIZED AS INCOME IN THE FIRST YEAR OF THE BILLING.
C) IN TERMS OF THE ARRANGEMENT BETWEEN DEPARTMENT OF TELECOMMUNICATIONS (“DOT”)
AND THE COMPANY, THE CHARGES FOR TELECOMMUNICATION SERVICES AND OTHER
INFRASTRUCTURAL SERVICES PROVIDED BY BSNL TO DOT ARE NEITHER BEING BILLED NOR
PROVIDED FOR.
D) ALE PROCEEDS OF SCRAP ARISING FROM MAINTENANCE AND PROJECT WORKS ARE TAKEN INTO
MISCELLANEOUS INCOME IN THE YEAR OF SALE.
E) INCOME FROM SIMS, RECHARGE COUPONS OF MOBILE, PREPAID CALLING CARDS, AND
PREPAID INTERNET CONNECTION CARDS ARE TREATED AS INCOME OF THE YEAR IN WHICH THE
PAYMENT IS RECEIVED SINCE THE EXTENT OF USE OF THESE CARDS WITHIN THE FINANCIAL YEAR
COULD NOT BE ASCERTAINED.
F) WHEREVER THERE IS UNCERTAINTY IN REALIZATION OF INCOME, SUCH AS LIQUIDATED DAMAGES,
CLAIMS ON GOVERNMENT DEPARTMENTS & LOCAL AUTHORITIES ETC., THESE ARE RECOGNIZED ON
COLLECTION BASIS.
47

48. G) THE CLAIMS ON ACCOUNT OF REIMBURSEMENT FOR PROVISION OF INFRASTRUCTURE, OPERATION
AND
MAINTENANCE OF VILLAGE PUBLIC TELEPHONES (VPTS) AND RURAL HOUSEHOLD CONNECTIONS
(RDELS) RECEIVABLE FROM U.S.O. FUND ARE ACCOUNTED FOR AS REVENUE ON ACCOUNT OF
THE FACT THAT THE CLAIM FOR INFRASTRUCTURE CANNOT BE CREDITED TO THE CONCERNED ASSET
ACCOUNT SINCE THE CLAIM AMOUNT COULD NOT BE SEGREGATED ASSET WISE.
H) OTHER INCOME BY WAY OF INTEREST ON LOANS TO EMPLOYEES, SECURITY DEPOSIT WITH
GOVERNMENT
DEPARTMENTS AND LOCAL AUTHORITIES, BEING NOT MATERIAL, ARE ACCOUNTED FOR ON
COLLECTION.
2.3 .3 FIXED ASSETS

3.1 :_FIXED ASSETS ARE CARRIED AT COST LESS DEPRECIATION. COST INCLUDES DIRECTLY
RELATED ESTABLISHMENT AND OTHER EXPENSES INCLUDING EMPLOYEE REMUNERATION AND
BENEFITS, DIRECTLY IDENTIFIABLE TO THE
48

49. CONSTRUCTION OR CREATION OF THE ASSETS.
3.2 :-EXPENDITURE ON REPLACEMENT OF ASSETS, EQUIPMENTS, INSTRUMENTS AND
REHABILITATION WORKS IS CAPITALIZED IF, IN THE OPINION OF THE MANAGEMENT, IT RESULTS IN
ENHANCEMENT OF REVENUE GENERATING CAPACITY.
3.3 :-ASSETS ARE CAPITALIZED TO THE EXTENT COMPLETION CERTIFICATES HAVE BEEN OBTAINED,
WHEREVER APPLICABLE.
3.4 :-THE COST OF STORES AND MATERIALS AT THE TIME OF ISSUE TO A PROJECT IS DEBITED
TO CWIP.
3.5 :-APPARATUS AND PLANTS PRINCIPALLY CONSISTING OF TELEPHONE EXCHANGES,
TRANSMISSION EQUIPMENTS AND AIR CONDITIONING PLANTS ETC. ARE CAPITALIZED AS AND WHEN AN
EXCHANGE IS COMMISSIONED AND PUT TO USE.
3.6 :-CABLES ARE CAPITALIZED AS AND WHEN READY FOR CONNECTION TO THE MAIN SYSTEM.
3.7: - INTANGIBLE ASSETS ARE STATED AT COST OF ACQUIRING THE SAME LESS ACCUMULATED
DEPRECIATION /
AMORTIZATION
2.3 .4 DEPRECIATION/AMORTIZATION
DEPRECIATION IS PROVIDED BASED ON THE WRITTEN DOWN VALUE METHOD AT THE RATES
PRESCRIBED IN
SCHEDULE XIV TO THE COMPANIES ACT, 1956 EXCEPT FOR SUBSCRIBER INSTALLATION. THE
SUBSCRIBER
INSTALLATION IS DEPRECIATED OVER THE USEFUL LIFE OF 5 YEARS ON WRITTEN DOWN VALUE
METHOD.
49

50. ASSETS COSTING UP - TO RS. 5,000 ARE DEPRECIATED FULLY IN THE YEAR OF PURCHASE.
SIMILARLY, PARTITION WORKS COSTING UP TO RS. 2, 00,000 ARE DEPRECIATED FULLY IN THE
YEAR OF CONSTRUCTION.
THE DEPRECIATION ON MACHINERY & TOOLS USED BOTH FOR PROJECT AND MAINTENANCE WORK IS
CHARGED TO PROFIT AND LOSS ACCOUNT INSTEAD OF CAPITALIZATION. ALL TELEPHONE EXCHANGE
BUILDINGS, ADMINISTRATIVE OFFICES AND CAPTIVE CONSUMPTION ASSEMBLING
PREMISES/WORKSHOPS ARE CONSIDERED AS NORMAL BUILDING AND NOT AS FACTORY BUILDING.
ACCORDINGLY DEPRECIATION IS CHARGED UNIFORMLY. INTANGIBLE ASSETS SUCH AS ENTRY
LICENSE FEE FOR TELECOM SERVICE OPERATIONS ARE AMORTIZED OVER THE LICENSE PERIOD (I.E.
20 YEARS) AND STANDALONE COMPUTER SOFTWARE APPLICATIONS ARE AMORTIZED OVER THE
LICENSE PERIOD SUBJECT TO MAXIMUM OF 10 YEARS AS PER STRAIGHT LINE METHOD.
2.3 .5 IMPAIRMENT OF ASSETS
ASSETS, WHICH ARE IMPAIRED BY DISUSE OR OBSOLESCENCE, ARE SEGREGATED FROM THE
CONCERNED ASSETS CATEGORY AND SHOWN AS ‘DECOMMISSIONED ASSETS’ AND PROVISION MADE
FOR THE LOSS, IF ANY, DUE TO THE DIFFERENCE BETWEEN THEIR NET CARRYING COST AND THE NET
REALIZABLE VALUE.
2.3 .6 INVESTMENTS
LONG-TERM INVESTMENTS ARE CARRIED AT COST, AFTER PROVIDING FOR ANY DIMINUTION IN VALUE,
IF SUCH DIMINUTION IS OF A PERMANENT NATURE.
2.3 .7 INVENTORIES
INVENTORIES ARE VALUED AT COST OR NET REALIZABLE VALUE AS THE CASE MAY BE - COST
ASCERTAINED GENERALLY ON WEIGHTED AVERAGE METHOD; OBSOLETE/NON MOVING INVENTORIES
ARE VALUED AT NET REALIZABLE VALUE.
50

51. 2.3 .8 FOREIGN CURRENCY TRANSACTIONS
(I) TRANSACTIONS IN FOREIGN CURRENCY ARE RECORDED AT THE EXCHANGE RATE PREVAILING ON
THE DATE OF THE TRANSACTION I.E. ON THE DATE OF PAYMENT OR RECEIPT AS THE CASE MAY BE.
(II) ALL FOREIGN CURRENCY LIABILITIES AND MONETARY ASSETS ARE STATED AT THE EXCHANGE
RATE PREVAILING AS AT THE DATE OF BALANCE SHEET AND THE DIFFERENCE TAKEN TO
PROFIT AND LOSS ACCOUNTS AS EXCHANGE FLUCTUATION LOSS OR GAIN.
2.3 .9 EXTRAORDINARY ITEMS
EXTRA-ORDINARY ITEMS OF INCOME AND EXPENDITURE, AS COVERED BY AS – 5, ARE DISCLOSED
SEPARATELY.
2.3 .10 EMPLOYEES’ BENEFITS
2.3 10.1 SHORT TERM EMPLOYEE BENEFITS :
SHORT TERM EMPLOYEE BENEFITS ARE RECOGNIZED IN THE PERIOD DURING WHICH THE SERVICES
HAVE BEEN RENDERED.
2.3 10.2 LONG TERM EMPLOYEE BENEFITS:
2.3 10.2.1 DEFINED CONTRIBUTION PLAN:
A) PENSION CONTRIBUTION (INCLUDING GRATUITY)
THE EMPLOYEES OF DOT WHO HAVE OPTED FOR ABSORPTION / ABSORBED IN THE COMPANY, AND
THE EMPLOYEES ON DEEMED DEPUTATION FROM GOVERNMENT ARE ELIGIBLE FOR PENSION, WHICH IS
A DEFINED CONTRIBUTION PLAN. THE COMPANY MAKES MONTHLY CONTRIBUTION (INCLUDING LIABILITY
ON ACCOUNT OF GRATUITY) AT THE APPLICABLE RATES AS PER GOVERNMENT PENSION RULES,
1972 AND FR & SR TO THE GOVERNMENT WHO ADMINISTERS THE SAME.
B) EMPLOYEES’ PROVIDENT FUND
ALL DIRECTLY RECRUITED EMPLOYEES OF THE COMPANY ARE ENTITLED TO RECEIVE BENEFITS UNDER
THE PROVIDENT FUND. BOTH EMPLOYEES AND EMPLOYER MAKE MONTHLY CONTRIBUTION TO THE
51

52. PLAN AT A PREDETERMINED RATE OF EMPLOYEE’S BASIC SALARY AND DEARNESS ALLOWANCE.
THESE CONTRIBUTIONS TO PROVIDENT FUND ARE ADMINISTERED BY THE PROVIDENT FUND
COMMISSIONER. CONTRIBUTIONS TO PROVIDENT FUND ARE EXPENSED IN THE PROFIT AND LOSS
ACCOUNT.
C) CONTRIBUTION FOR LEAVE SALARY
FOR EMPLOYEES ON DEEMED DEPUTATION FROM GOVERNMENT, LEAVE SALARY CONTRIBUTION IS
PROVIDED AND SUCH LEAVE SALARY CONTRIBUTION TAKES CARE OF LEAVE ENCASHMENT ALSO.
2.3 10.2.2 DEFINED BENEFIT PLANS:
A) LEAVE ENCASHMENT:
THE LIABILITY ON ACCOUNT OF UNVEILED LEAVE IN RESPECT OF ABSORBED EMPLOYEES AND
DIRECTLY RECRUITED EMPLOYEES AT THE YEAR END IS FULLY PROVIDED FOR ON ESTIMATED BASIS.
B) GRATUITY
THE COMPANY PROVIDES FOR GRATUITY, A DEFINED BENEFIT PLAN (THE GRATUITY PLAN) COVERING
ALL DIRECTLY RECRUITED ELIGIBLE EMPLOYEES. IN ACCORDANCE WITH THE PAYMENT OF GRATUITY
ACT, 1972, THE GRATUITY PLAN PROVIDES A LUMP SUM PAYMENT TO VESTED EMPLOYEES ON
RETIREMENT, DEATHS, INCAPACITATION OR TERMINATION OF EMPLOYMENT. LIABILITIES WITH
REGARDS TO THE GRATUITY PLAN ARE DETERMINED BY ACTUARIAL VALUATION ON BALANCE SHEET
DATE AND ARE EXPENSED IN THE PROFIT AND LOSS ACCOUNT
C) OTHER BENEFITS INCLUDING POST EMPLOYMENT MEDICAL CARE
MEDICAL REIMBURSEMENTS AND OTHER PERSONAL CLAIM BILLS OF EXISTING / RETIRED EMPLOYEES
ARE ACCOUNTED FOR ON ACTUAL BASIS IN RESPECT OF BILLS RECEIVED TILL THE CUT OFF PERIOD IN
THE ACCOUNTS AT THE CONCERNED PRIMARY UNITS AS PER THE PRESCRIBED LIMITS.
2.3 11. MANUFACTURING EXPENSES
EXPENSES INCURRED AT FACTORY UNITS ARE ALLOCATED TO THE COST OF THE MANUFACTURED
PRODUCTS.
52

53. 2.3 12. PRIOR PERIOD ITEMS
ITEMS OF INCOME/EXPENDITURE EXCEEDING RS. 5 LAKH ARE ONLY CONSIDERED FOR BEING
TREATED AS 'PRIOR PERIOD ITEMS'.
2.3 13. TAXES ON INCOME
TAXES ON INCOME FOR THE CURRENT PERIOD ARE DETERMINED ON THE BASIS OF TAXABLE INCOME
AND TAX CREDITS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT,
1961.
IN ACCORDANCE WITH THE AS-22, DEFERRED TAX LIABILITY IS RECOGNIZED ON THE TIMING
DIFFERENCES
BETWEEN ACCOUNTING INCOME AND THE TAXABLE INCOME FOR THE PERIOD TAKING INTO
CONSIDERATION THE CONTENTS OF ACCOUNTING STANDARD INTERPRETATIONS 3 AND QUANTIFIED
USING THE TAX RATES IN FORCE OR SUBSTANTIVELY ENACTED AS ON THE BALANCE SHEET DATE.
DEFERRED TAX ASSETS ARE RECOGNIZED AND CARRIED FORWARD TO THE EXTENT THERE IS A
VIRTUAL CERTAINTY THAT SUCH DEFERRED TAX ASSETS CAN BE REALIZED.
2.3 14. PROVISIONS
PROVISIONS ARE RECOGNIZED WHEN THE COMPANY HAS A PRESENT OBLIGATION AS A RESULT OF
PAST EVENTS; IT IS MORE LIKELY THAN NOT THAT AN OUTFLOW OF RESOURCES WILL BE REQUIRED
TO SETTLE THE OBLIGATION; AND THE AMOUNT HAS BEEN RELIABLY ESTIMATED.
2.3 15. CONTINGENT LIABILITIES
LIABILITIES, THOUGH CONTINGENT, ARE PROVIDED FOR IF THERE ARE REASONABLE CHANCES OF
MATURING SUCH LIABILITIES AS PER MANAGEMENT. OTHER CONTINGENT LIABILITIES, BARRING
FRIVOLOUS CLAIMS, NOT ACKNOWLEDGED AS DEBTS, ARE DISCLOSED BY WAY OF NOTES.
53

54. 2.3 16. EARNING PER SHARE
EARNINGS PER SHARE (“EPS”) COMPRISE THE N ET PROFIT AFTER TAX
(EXCLUDING EXTRAORDINARY INCOME NET OF TAX). THE NUMBER OF SHARES USED IN COMPUTING
BASIC & DILUTED EPS IS THE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE
YEAR.
2.3 17. SEGMENT REPORTING
THE PRIMARY SEGMENT CONSISTS OF ‘BASIC’ AND ‘CELLULAR’ SERVICES PROVIDED. THE
MANUFACTURING
ACTIVITIES HAVE NOT BEEN TREATED AS A SEPARATE SEGMENT SINCE SUCH ACTIVITIES ARE
ESSENTIALLY CARRIED ON AS SUPPORT SERVICE TO OTHER SEGMENTS. THE FOLLOWING SPECIFIC
ACCOUNTING POLICIES HAVE BEEN FOLLOWED FOR SEGMENT REPORTING: SEGMENT REVENUE
INCLUDES SERVICE INCOME AND OTHER INCOME DIRECTLY IDENTIFIABLE WITH/ALLOCABLE TO THE
SEGMENT. INCOME/EXPENSE, WHICH RELATES TO THE COMPANY, AS A WHOLE AND NOT ALLOCABLE
TO INDIVIDUAL BUSINESS
SEGMENT IS INCLUDED IN “UN-ALLOCABLE CORPORATE INCOME/EXPENSE RESPECTIVELY”.
EXPENSES THAT ARE DIRECTLY IDENTIFIABLE WITH/ALLOCABLE TO SEGMENTS ARE CONSIDERED FOR
DETERMINING SEGMENT RESULTS. SEGMENT ASSETS AND LIABILITIES INCLUDE THOSE DIRECTLY
IDENTIFIABLE WITH THE RESPECTIVE SEGMENTS. UNALLOWABLE CORPORATE ASSETS AND LIABILITIES
REPRESENT THE ASSETS AND LIABILITIES THAT RELATE TO THE COMPANY AS A WHOLE AND NOT
ALLOCABLE TO ANY SEGMENT.
. TELECOM SECTOR PROFILE
.1. BACKGROUND

54

55. 4.2. ADMINISTRATION AND CONTROL

4.4. ENTRY OF PRIVATE SECTOR

4.5. REGULATORY CONTROL

4.6. TELECOM POLICIES

4.7. CORPORATIZATION

4.8. OTHER GOVERNMENT ORGANIZATIONS UNDER TELECOM SECTOR

4.9. DISINVESTMENT OF PSUS

4.10 .FINANCIAL PERFORMANCE

4.11. FOREIGN DIRECT INVESTMENT

4.12. EMPLOYMENT GENERATION
55

56. 4.13. CONTRIBUTION OF THE PRIVATE AND PUBLIC SECTORS IN TELECOM NETWORK

4.14. WIRELESS IN LOCAL LOOP (MOBILE) SERVICE VS. CELLULAR MOBILE TELEPHONE SERVICE
4.15. THE PICTURE AHEAD
4.1. BACKGROUND
TELEPHONE SERVICES HAVE BEEN RECOGNIZED THE WORLD OVER AS AN IMPORTANT TOOL FOR
SOCIO-ECONOMIC DEVELOPMENT FOR A NATION AND HENCE TELECOM INFRASTRUCTURE IS REGARDED
AS A CRUCIAL FACTOR IN ACHIEVING THE SOCIO-ECONOMIC OBJECTIVES IN INDIA. INDIAN TELECOM IS
MORE THAN 160 YEARS OLD BEGINNING WITH COMMISSIONING OF THE FIRST TELEGRAPH LINE
BETWEEN KOLKATA AND DIAMOND HARBOUR IN 1839. IN 1948 INDIA HAD ONLY 0.1 MILLION
TELEPHONE CONNECTIONS WITH A TELEPHONE DENSITY OF ABOUT 0.02 TELEPHONES PER
HUNDRED POPULATIONS. S INCE THEN INDIA HAS COME A LONG WAY AND BY 31 AUGUST
2003 THERE WERE 45.6 MILLION TELEPHONE CONNECTIONS IN THE COUNTRY WITH A TELEPHONE
DENSITY OF 5.72 TELEPHONES PER HUNDRED POPULATION.
VARIOUS ADMINISTRATIVE AND FUNCTIONAL ASPECTS OF THE TELECOM SECTOR IN THE COUNTRY ARE
DISCUSSED BELOW:
4.2. ADMINISTRATION AND CONTROL
THE TELECOM COMMISSION, SET UP IN APRIL 1989 HAS THE ADMINISTRATIVE AND FINANCIAL
POWERS OF THE GOVERNMENT OF INDIA TO DEAL WITH VARIOUS ASPECTS OF
TELECOMMUNICATIONS . THE TELECOM COMMISSION AND THE DEPARTMENT OF
56

57. TELECOMMUNICATIONS (DOT) ARE RESPONSIBLE FOR POLICY FORMULATION, LICENSING, WIRELESS
SPECTRUM MANAGEMENT, ADMINISTRATIVE MONITORING OF PUBLIC SECTOR UNDERTAKINGS
(PSUS) ENGAGED IN TELECOMMUNICATION SERVICES, RESEARCH AND DEVELOPMENT AND
STANDARDIZATION/VALIDATION OF EQUIPMENT, ETC.
4.3. TELECOM REFORMS
TELECOM SERVICES AND MOST OF THE MANUFACTURING ACTIVITIES WERE TOTALLY UNDER
GOVERNMENT DOMAIN TILL TELECOM REFORMS BEGAN IN 1980S WITH THE LAUNCH OF A “MISSION
BETTER COMMUNICATION” PROGRAMME. PRIVATE MANUFACTURING OF EQUIPMENT FOR
CUSTOMERS' USE WAS ALLOWED IN 1984 AND THE CENTRE FOR DEVELOPMENT OF TELEMETRIC
(C-DOT) WAS ESTABLISHED FOR THE DEVELOPMENT OF INDIGENOUS TECHNOLOGIES. TWO LARGE
CORPORATE ENTITIES WERE SPUN OFF FROM DOT NAMELY, MAHANAGAR TELEPHONE NIGAM
LIMITED (MTNL) IN FEBRUARY 1986 FOR DELHI AND MUMBAI AND VIDESH SANCHAR NIGAM
LIMITED (VSNL) IN MARCH 1986 FOR ALL INTERNATIONAL SERVICES. THIS BEGAN THE PROCESS
OF CORPORATIZATION OF SERVICES THAT HAD HITHERTO BEEN UNDER A GOVERNMENT DEPARTMENT.
4.4. ENTRY OF PRIVATE SECTOR
A PARADIGM SHIFT IN GOVERNMENT POLICY CAME IN THE EARLY NINETIES WHEN THE
TELECOMMUNICATION SECTOR WAS OPENED UP TO THE PRIVATE SECTOR. THE PROCESS OF ENTRY
OF PRIVATE OPERATORS IN PROVIDING TELECOMMUNICATION SERVICES IN INDIA COMMENCED IN
1992. APART
FROM PRIVATIZING BASIC TELEPHONE SERVICES GOVERNMENT ALSO DECIDED TO INTRODUCE A
NUMBER OF VALUE ADDED SERVICES THROUGH PRIVATE OPERATORS, SUCH AS CELLULAR MOBILE
TELEPHONES, RADIO PAGING, E-MAIL, INTERNET, CLOSED USER GROUPS (CUG), ETC., WHICH ADD
TO THE VALUE OF THE EXISTING BASIC TELEPHONE SERVICES.
57

58. 4.5. REGULATORY CONTROL
ENTRY OF PRIVATE SERVICE PROVIDERS BROUGHT WITH IT THE INEVITABLE NEED FOR INDEPENDENT
REGULATION. TELECOM REGULATORY AUTHORITY OF INDIA (TRAI) WAS THUS ESTABLISHED WITH
EFFECT FROM 20 FEBRUARY 1997 BY AN ACT OF PARLIAMENT CALLED TELECOM REGULATORY
AUTHORITY OF INDIA ACT, 1997, TO REGULATE THE TELECOM SERVICES, INCLUDING
FIXATION/REVISION OF TARIFFS FOR TELECOM SERVICES WHICH WERE EARLIER VESTED IN THE
CENTRAL GOVERNMENT. THE TRAI ACT WAS AMENDED BY AN ORDINANCE EFFECTIVE FROM 24
JANUARY 2000 SEPARATING THE ADJUDICATORY AND DISPUTES FUNCTIONS FROM THE TRAI BY
ESTABLISHING A TELECOMMUNICATIONS DISPUTE SETTLEMENT AND APPELLATE TRIBUNAL
(TDSAT). TDSAT ADJUDICATES ANY DISPUTE BETWEEN A LICENSOR AND A LICENSEE, BETWEEN
TWO OR MORE SERVICE PROVIDERS, BETWEEN A SERVICE PROVIDER AND GROUP OF CONSUMERS,
AND TO HEAR AND DISPOSE OF APPEALS AGAINST ANY DIRECTION, DECISION OR ORDER OF TRAI. A
BETTER MODEL WOULD HAVE BEEN TO PUT THE INDEPENDENT REGULATOR IN PLACE EARLY IN THE
NINETIES ALONG WITH THE OPENING UP OF SERVICES TO THE PRIVATE SECTOR.
KEEPING IN VIEW THE INCREASING CONVERGENCE OF TELECOM, COMPUTERS, TELEVISION AND
ELECTRONICS THE GOVERNMENT OF INDIA INTRODUCED THE COMMUNICATION CONVERGENCE BILL
2001 IN THE LOK SABHA ON 31 AUGUST 2001; THIS WAS THEREAFTER SENT TO THE
PARLIAMENTARY STANDING COMMITTEE ON COMMUNICATIONS AND INFORMATION TECHNOLOGY
WHICH HAS PRESENTED ITS REPORT TO THE PARLIAMENT IN NOVEMBER 2002 AND THE
OBSERVATIONS AND RECOMMENDATIONS MADE BY IT WERE UNDER CONSIDERATION. THE BILL AIMS
AT PROMOTING, FACILITATING AND DEVELOPING IN AN ORDERLY MANNER THE CARRIAGE AND
CONTENT OF COMMUNICATIONS (INCLUDING BROADCASTING, TELECOMMUNICATIONS AND MULTIMEDIA),
IN VIEW OF THE NECESSITY TO FACILITATE DEVELOPMENT OF A NATIONAL INFRASTRUCTURE FOR AN
INFORMATION BASED SOCIETY, AND TO ENABLE ACCESS THERETO. IT ALSO SEEKS TO PROVIDE A
CHOICE OF SERVICES TO THE PEOPLE WITH A VIEW TO PROMOTING PLURALITY OF NEWS, VIEWS AND
INFORMATION. THIS REGULATORY AND LICENSING AUTHORITY WILL BE KNOWN AS THE
“COMMUNICATION COMMISSION OF INDIA”. THE LICENSING FUNCTION, PRESENTLY BEING HANDLED
BY DOT, WILL PASS ON TO THIS COMMISSION. HOWEVER, THE BILL IS YET TO BE PASSED.
4.6 TELECOM POLICIES
THE FIRST NATIONAL TELECOM POLICY WAS ANNOUNCED IN 1994, WITH A MAJOR THRUST ON
58

59. UNIVERSAL SERVICE AND QUALITATIVE IMPROVEMENT IN TELECOM SERVICES AND ALSO, OPENING OF
PRIVATE SECTOR PARTICIPATION IN BASIC TELEPHONE SERVICES. IN THE INITIAL ENTHUSIASM OF
OPENING UP OF THE TELECOMMUNICATIONS SECTOR, THE PRIVATE OPERATORS, IN THEIR BIDS,
OFFERED MUCH HIGHER AMOUNTS OF LICENCE FEE THAN THEY COULD EVENTUALLY MUSTER. AS A
RESULT BY MAY 1999, THEY HAD ACCUMULATED ARREARS TOTALING RS 3779.45 CRORE
PAYABLE TO GOVERNMENT. A MAJOR LANDMARK IN THE TELECOM SECTOR CAME WITH THE NEW
TELECOM POLICY 1999 (NTP-99) WHICH ALLOWED PRIVATE OPERATORS TO MIGRATE FROM FIXED
LICENSE FEE REGIME TO A REVENUE SHARING REGIME. OTHER PROVISIONS IN NTP-99 WERE TO
PERMIT INTERCONNECTIVITY AND SHARING OF INFRASTRUCTURE AMONG VARIOUS SERVICE PROVIDERS
WITHIN THE SAME AREAS OF OPERATIONS, SEPARATION OF POLICY AND LICENSING FUNCTIONS OF
DOT FROM THE SERVICE PROVISION FUNCTION, OPENING OF NATIONAL LONG DISTANCE SERVICES TO
COMPETITION AND CARRYING OF BOTH VOICE AND DATA TRAFFIC BY SERVICE PROVIDERS. AS OF 31
MARCH 2003, UNRESTRICTED ENTRY HAS BEEN ALLOWED IN BASIC SERVICES ON REVENUE SHARING
BASIS, ALL TELECOM SERVICES HAVE BEEN OPENED UP FOR PRIVATE SECTOR PARTICIPATION,
NATIONAL AND INTERNATIONAL DATA CONNECTIVITY HAS BEEN OPENED TO ALL AND INTERNET
SERVICES HAVE ALSO BEEN OPENED UP WITHOUT ANY RESTRICTION ON THE NUMBER OF ENTRANTS
AND WITHOUT ANY ENTRY FEE. NATIONAL FREQUENCY ALLOCATION PLAN (NFAP-2002) HAS BEEN
EVOLVED IN LINE WITH THE RADIO REGULATIONS OF THE INTERNATIONAL TELECOM UNION (ITU)
FOR CATERING TO THE CONFLICTING DEMAND ON SPECTRUM.
4.7. CORPORATIZATION
AS A PART OF THE CONTINUING PROCESS OF OPENING UP OF THE SECTOR, AND IN PURSUANCE OF
NTP-99, DEPARTMENT OF TELECOM SERVICES (DTS) WAS CARVED OUT FROM DOT IN
OCTOBER 1999 FOR PROVIDING TELECOMMUNICATIONS SERVICES IN THE COUNTRY. SUBSEQUENTLY
IN JULY 2000, DTS WAS BIFURCATED AND A NEW DEPARTMENT KNOWN AS THE DEPARTMENT OF
59

60. TELECOM OPERATIONS (DTO) WAS CREATED. DTS AND DTO WERE FINALLY CORPORATIZED
INTO A WHOLLY OWNED GOVERNMENT COMPANY NAMELY BHARAT SANCHAR NIGAM LIMITED
(BSNL) (INCORPORATED ON 15 SEPTEMBER 2000) AND THEIR BUSINESS OF PROVIDING TELECOM
SERVICES IN THE COUNTRY WAS TRANSFERRED TO THIS COMPANY WITH EFFECT FROM 1 OCTOBER
2000. THE CREATION OF BSNL IS EXPECTED TO PROVIDE A LEVEL PLAYING FIELD IN ALL AREAS
OF TELECOM SERVICES, BETWEEN GOVERNMENT OPERATORS AND PRIVATE OPERATORS.
4.8. OTHER GOVERNMENT ORGANIZATIONS UNDER TELECOM SECTOR
BESIDES MTNL, BSNL AND VSNL, OTHER GOVERNMENT OWNED PUBLIC SECTOR
UNDERTAKINGS UNDER TELECOM SECTOR WERE ITI LIMITED (ITI), HINDUSTAN TELEPRINTERS
LIMITED (HTL), TELECOMMUNICATIONS CONSULTANTS INDIA LIMITED (TCIL), INTELLIGENT
COMMUNICATION SYSTEMS INDIA LIMITED (ICSIL) AND MILLENNIUM TELECOM LIMITED (MTL).
ITI LIMITED WAS FORMED IN 1948 FOR MANUFACTURING A WIDE RANGE OF EQUIPMENT, WHICH
INCLUDES ELECTRONIC SWITCHING EQUIPMENT, TRANSMISSION EQUIPMENT AND TELEPHONE
INSTRUMENTS OF VARIOUS TYPES. HTL WAS ESTABLISHED IN DECEMBER 1960 FOR MANUFACTURE
OF TELEPRINTERS AND ANCILLARY EQUIPMENT. TCIL WAS ESTABLISHED IN 1978 FOR PROVIDING
KNOW-HOW IN ALL THE FIELDS OF TELECOMMUNICATIONS AT GLOBAL LEVEL. THE CORE COMPETENCE
OF TCIL IS IN COMMUNICATIONS NETWORK PROJECTS, SOFTWARE SUPPORT, SWITCHING AND
TRANSMISSION SYSTEMS, CELLULAR SERVICES, RURAL TELECOMMUNICATIONS AND OPTICAL FIBER
BASED BACKBONE NETWORK. ICSIL WAS ESTABLISHED IN APRIL 1987 FOR MANUFACTURING
COMPUTER BASED COMMUNICATION SYSTEMS AND EQUIPMENT. IT ALSO PROVIDES ENGINEERING,
TECHNICAL AND MANAGEMENT CONSULTANCY SERVICES FOR COMPUTERS AND COMMUNICATIONS
SYSTEMS IN INDIA AND ABROAD. MTL WAS ESTABLISHED IN FEBRUARY 2000 AS A WHOLLY OWNED
SUBSIDIARY OF MTNL FOR PROVISIONING OF INTERNET SERVICES IN THE COUNTRY. IT IS PURSUING
ESTABLISHMENT OF BROADBAND INTERNET ACCESS FOR THE CORPORATE SEGMENT AND VOICE
60

61. OVER INTERNET PROTOCOL (VOIP) TELEPHONY SERVICES THROUGHOUT INDIA WITH USE OF
RELEVANT TECHNOLOGIES LIKE VSATS ETC.
IN ADDITION TO C-DOT AND TELECOM COMMISSION, OTHER GOVERNMENT ORGANIZATIONS
ENGAGED IN THE TELECOM SECTOR (AS A PART OF DOT) WERE TELECOM ENGINEERING CENTRE
(TEC) AND THE WIRELESS PLANNING AND COORDINATION (WPC) WING. C-DOT WAS
ESTABLISHED IN 1984 WITH THE OBJECTIVE OF DEVELOPING A NEW GENERATION OF DIGITAL
SWITCHING ITEMS. C-DOT HAS DEVELOPED A WIDE RANGE OF SWITCHING AND TRANSMISSION
PRODUCTS BOTH FOR THE RURAL AND URBAN APPLICATIONS. TEC IS AN INSTITUTION, WHICH WORKS
AS A PART OF DOT AND IS DEVOTED TO PRODUCT VALIDATION AND STANDARDIZATION FOR THE USER
AGENCIES. IT ALSO PROVIDES TECHNICAL AND ENGINEERING SUPPORT TO TELECOM COMMISSION
AND FIELD UNITS. WPC IS A WING OF DOT THAT DEALS WITH THE POLICY OF SPECTRUM
MANAGEMENT, LICENSING, FREQUENCY ASSIGNMENTS, INTERNATIONAL COORDINATION FOR SPECTRUM
MANAGEMENT AND ADMINISTRATION OF THE INDIAN WIRELESS TELEGRAPH ACT 1933.
4.9. DISINVESTMENT OF PSUS
61

62. GOVERNMENT HAS DISINVESTED ITS MAJOR SHAREHOLDING IN HTL
DURING OCTOBER 2001 AND IN VSNL DURING FEBRUARY 2002 AND
SINCE THEN THESE UNDERTAKINGS HAS CEASED TO BE GOVERNMENT OWNED
PSUS.
4.10. FINANCIAL PERFORMANCE
62

63. TELECOM LANDSCAPE IN INDIA HAS CHANGED COMPLETELY SINCE LIBERALIZATION AND MONOPOLIES
IN TELECOM SECTOR HAVE BEEN REPLACED WITH COMPETITIVE REGIME (OLIGOPOLIES). IT IS A
WELL-KNOWN FACT THAT BSNL WAS CARVED OUT OF ERSTWHILE DOT TO PROVIDE LEVEL PLAYING
FIELD TO PRIVATE TELECOMS. SINCE THEN MANY NEW BUSINESS FIRMS HAVE ENTERED IN THE
ARENA AND TODAY THERE IS MERCILESS CUTTHROAT COMPETITION IN THIS SECTOR. EVEN THOUGH
COMPETITION IS BONANZA FOR SUBSCRIBERS BUT FOR CORPORATES IT IS THE QUESTION OF
SURVIVABILITY. IF THEY ARE NOT IN A POSITION TO EARN SUFFICIENT REVENUE FROM THE
OPERATIONS WHICH NOT ONLY MEETS THEIR GROWTH AND EXPANSION PLANS BUT ARE NECESSARY
FOR PAYING ALL GOVERNMENT LEVIES AND DUES AS REVENUE SHARE, SPECTRUM CHARGES, USO
FUND CONTRIBUTION ETC. AS WELL AS MEETING INTERNAL REQUIREMENTS LIKE OPERATION AND
ADMINISTRATION EXPENDITURES, STAFF COSTS, INTEREST AND REPAYMENT OF DEBT ETC.
CORPORATES ARE ALSO UNDER TREMENDOUS PRESSURE FROM INVESTORS TO SHOW BETTER
RESULTS SO THAT THEY ALSO GET HANDSOME RETURNS ON THEIR INVESTMENTS IN THE FORM OF
DIVIDENDS OR APPRECIATION IN SHARE VALUES. TO MEET ALL SUCH REQUIREMENTS CORPORATE
MANAGEMENT SOME TIME INDULGES INTO CREATIVE ACCOUNTING TO ARTIFICIAL BOOST THE PROFIT
FIGURES BECAUSE AT THE END OF DAY IT IS THE PROFIT, WHICH MATTERS MOST TOO ANY
BUSINESS ORGANIZATION IF IT IS NOT A NON-PROFIT ORGANIZATION. THERE IS MANDATORY
REQUIREMENT FOR ALL COMPANIES TO FILE FOLLOWING THREE AUDITED STATEMENTS TO COMPANY
LAW BOARD AT THE CLOSURE OF EVERY FINANCIAL YEAR I.E. BALANCE SHEET AS ON THE LAST
DAY OF FINANCIAL YEAR, PROFIT AND LOSS ACCOUNT FOR THE WHOLE ACCOUNTING YEAR AND CASH
FLOW STATEMENT. FOR STAKE HOLDERS AND INVESTORS IT BECOMES NECESSARY TO LOOK BEYOND
THE FIGURES QUOTED IN THESE STATEMENTS AND CARRY OUT THE IN DEPTH FINANCIAL ANALYSIS TO
TAKE APPROPRIATE DECISION REGARDING THEIR INVESTMENT AND OTHER IMPORTANT DECISIONS. IN
RESPECT OF BSNL ANALYSIS CARRIED OUT IS BASED ON ITS AUDITED BALANCE SHEET AND
PROFIT AND LOSS ACCOUNTS TAKEN FROM ITS ANNUAL REPORTS.
ROLE OF COMMUNICATION SERVICES IN NATIONAL GROWTH:
PROPORTION OF COMMUNICATION SERVICES IN GDP IS INCREASING AT FASTER RATE, AS IT IS
EVIDENT FROM THE FOLLOWING TABLE.
63

64. Service Sector Share in GDP
Share % in
GDP (2002-03)
Growth
2002-03
Construction 5.4 7.3
Trade 14.0 4.5
Hotels & Restaurants 1.1 4.0
Railway 1.1 5.7
Other Transport 4.3 6.0
Storage 0.1 -7.8
Communications 3.5 22.0
Banking & Insurance 6.9 11.6
Real Estate, Business / Legal
Services
6.1 5.9
Defence 5.9 5.3
Other Community & social
Services
7.8 6.2
Total Service Sector 56.1 7.2
FROM ABOVE TABLE IT IS CLEAR THAT GROWTH RATE (22%) OF COMMUNICATION SERVICES IN
GDP IS HIGHEST AND PROPORTION AND IMPORTANCE OF COMMUNICATION SERVICES IS
CONTINUOUSLY INCREASING. IT IS CONSIDERED AS GROWTH ENGINE FOR OVERALL ECONOMIC
GROWTH. GRAPH GIVEN BELOW INDICATES THE EXPONENTIAL GROWTH OF TELECOMMUNICATION
INFRASTRUCTURE IN INDIA. AS OF NOW TOTAL TELEPHONES (BASIC + MOBILE) OF ALL OPERATORS
PUT TOGETHER HAS CROSSED 15 CRORES. IN THE MONTH OF AUGUST-2006 THERE WAS ADDITION
OF 58 LACKS OF NEW MOBILE SUBSCRIBER. SUCH IS A GROWTH OF TELECOMMUNICATION IN INDIA,
EVEN NOW SURPASSING TO THE GROWTH IN CHINA.
64

65. Growth of Telecommunications in India
Growth of Telecommunications in India
0
10
20
30
40
50
60
70
80
Ma r -1 98 1 Ma r-1 9 92 Ma r-1 9 94 Ma r-1 9 96 Ma r-1 9 98 Ma r-2 00 0 Ma r-2 00 2 Ma r- 2 00 4
Fixes Line
Telephones
Cellular Mobile
Telephones
Private Basic
Telephone
Tot al Telephones
IN SUCH A VOLATILE SCENARIO, KNOWING ABOUT THE PERFORMANCE OF A COMPANY BECOMES VERY
IMPORTANT. FINANCIAL PERFORMANCE IS A BED ROCK FOR OVERALL PERFORMANCE AND FUTURE
GROWTH OF ANY COMPANY. KEEPING THIS VIEW IN MIND I HAVE TRIED TO PUT SOME RELEVANT
FACTS THROUGH THIS ARTICLE.
65

66. A.FINANCIAL PERFORMANCE OF PSUS UNDER TELECOM SECTOR
AS ON 31 MARCH 2003, SIX PSUS NAMELY BSNL, MTNL, ITI, TCIL, ICSIL AND MTL
WERE IN THE TELECOM SECTOR. SOME OF THE IMPORTANT FINANCIAL PERFORMANCE INDICATORS
OF THESE PSUS FOR THE YEAR ENDED 31 MARCH 2003 WERE AS UNDER:
PSUINVESTMEN
T IN
SHARES BY
GOVERNME
NT
GOVT. LOANS TOTA
L
INCO
ME
EARN
ED
DIVIDEND
PAID ON
GOVT.
EQUITY
INVESTMENT
CAP
ITAL
EMP
LOY
ED
PROFIT
BEFORE TAX
(PBT)
PERCENTAGE OF
PBT TO CAPITAL
EMPLOYED
EQUITY
SHARES
PREFERENCE
SHARES
TOTAL
(RUPEES IN CRORE) %
BSNL 5000.007500.00 12500.00750
1.00
2819
2.60
250.0
0
54612.57 2657.905
MTNL 354.37 0.00 354.37 0.006030
.67
159.4
7
8451.15 1237.1915
ITI 67.47 0.00 67.47 0.001767
.96
0.001460.49 (376.67)(26)
TCIL14.40 0.00 14.40 0.00590.
44
21.60411.01 51.50 13
ICSIL0.00 0.00 0.00 0.0016.9
2
0.000.44 0.57 130
MTL 0.00 0.00 0.00 0.002.660.003.21 1.02 32
TOTAL5436.247500.00 12936.24750
1.00
3660
1.25
431.0
7
64938.87 3571.515
66

67. As could be seen from the above table, on Equity capital investment of Rs 5,436.24
crore in these five PSUs, Government received dividend of Rs 431.07 crore which
works out to only 7.93 per cent. On Preference capital investment of Rs 7,500 crore
Government did not receive any dividend as BSNL has been exempted from
payment of dividend up to 31 March 2004. The total income and ‘profit before tax’
earned by these PSUs during the year were Rs 36,601.25 crore and Rs 3,571.51
crore, respectively. On total capital employed of Rs 64,938.87 crore in above PSUs,
the overall percentage of ‘profit before tax’ worked out to only 5 per cent.
The individual financial performance of each of these PSUs is also discussed in the
succeeding chapters
4.11 FOREIGN DIRECT INVESTMENT
AS A RESULT OF POSITIVE RESPONSE TO THE INVESTMENT POLICY BEING PURSUED FOR THE
TELECOM SECTOR, MORE THAN 11 PER CENT OF THE TOTAL INFLOW OF FOREIGN DIRECT
INVESTMENT (FDI) OF RS 9,562 CRORE DURING AUGUST 1991 TO DECEMBER 2002 HAS COME
DURING THE LAST ONE YEAR (JANUARY TO DECEMBER 2002) ITSELF. OF RS 9,562 CRORE OF
FDI IN TELECOM SECTOR, MORE THAN 28 PER CENT HAS COME FOR CELLULAR MOBILE AND BASIC
TELEPHONE SERVICES.
4.12 EMPLOYMENT GENERATION
AS ON 31 MARCH 1981 THERE WERE AROUND 2.80 LAKH GOVERNMENT EMPLOYEES (EXCLUDING
INDUSTRIAL WORKERS) WORKING IN THE TELECOM SECTOR. WITH THE GROWTH OF THE SECTOR,
THIS NUMBER HAS ALSO GONE UP AND AS AT THE END OF 31 MARCH 2003 THERE WERE AROUND
4.12 LAKH GOVERNMENT EMPLOYEES (EXCLUDING INDUSTRIAL WORKERS) WORKING IN THIS SECTOR
(DOT, BSNL AND MTNL); THIS REPRESENTED GROWTH IN EMPLOYMENT GENERATION BY AROUND
47 PER CENT OVER THE LAST 22 YEARS.
4.13 CONTRIBUTION OF THE PRIVATE AND PUBLIC SECTORS IN TELECOM NETWORK
67

68. PRIVATE SECTOR HAS BEEN ALLOWED ENTRY IN BASIC AS WELL AS VALUE ADDED SERVICES
SUCH AS CELLULAR MOBILE TELEPHONE SERVICE, RADIO PAGING, INTERNET, NATIONAL AND
INTERNATIONAL LONG DISTANCE SERVICES, GLOBAL MOBILE PERSONAL COMMUNICATION SERVICE, V-
SAT SERVICE, ETC. THE CONTRIBUTION OF PRIVATE SECTOR AND PUBLIC SECTOR (MTNL &
BSNL) IN SOME OF THE IMPORTANT FIELDS OF NATIONAL TELECOM NETWORK AS ON 31 AUGUST
2003 WAS AS UNDER:
SL.
NO.
TELECOM NETWORK PUBLIC SECTOR
(MTNL & BSNL)
PRIVATE
SECTOR
TOTAL
(FIGURES IN LAKH)
1. DIRECT EXCHANGE LINES (INCLUDING
WLL)
404.20 51.80 456.00
2. RURAL DIRECT EXCHANGE LINES
(INCLUDING WLL)
114.97 NIL 114.97
3. VILLAGE PUBLIC TELEPHONES 5.05 0.12 5.17
4. CELLULAR MOBILE CONNECTIONS 39.90 134.00 173.90
5. PUBLIC CALL OFFICES (AS ON 30
JUNE 2003)
14.80 NIL 14.80
6. INTERNET CONNECTIONS (AS ON 31
MARCH 2003)
9.91 22.00 31.91
The growth in fixed lines (DELs) and cellular mobile telephones in India during 31
March 1999 to 31 August 2003 was as given in the chart.
68

69. FIXED LINES TELEPHONES (DELS INCLUDING WLL) INCREASED FROM 215.90 LAKH AS ON 31
MARCH 1999 TO 456.00 LAKH AS OF 31 AUGUST 2003 WHICH REPRESENTED GROWTH OF MORE
THAN 111 PER CENT DURING THIS PERIOD. IN CASE OF CELLULAR MOBILE TELEPHONES, HOWEVER,
THE NUMBER OF CONNECTIONS HAS INCREASED DRAMATICALLY FROM 12.00 LAKH AS ON 31
MARCH 1999 TO 173.90 LAKH AS OF 31 AUGUST 2003, WHICH REPRESENTED A TREMENDOUS
GROWTH OF MORE THAN FOURTEEN-FOLD DURING THIS PERIOD.
SIMILARLY THE POSITION OF DEMAND AND SUPPLY OF TELEPHONES (DELS, WLL AND CELLULAR)
IN INDIA DURING THE YEARS 1980-81 TO 2002-03 (UP TO AUGUST 2003) WAS AS UNDER:
69

70. AS CAN BE SEEN, AGAINST THE DEMAND OF 26 LAKH TELEPHONES AS ON 31 MARCH 1981, THE
DEMAND AS ON 31 AUGUST 2003 WAS 649 LAKH REPRESENTING AROUND TWENTY-FOUR-FOLD
GROWTH IN DEMAND. THE SUPPLY OF TELEPHONES AGAINST ABOVE DEMAND WAS 22 LAKH
TELEPHONES AS ON 31 MARCH 1981 AND 630 LAKH AS ON 31 AUGUST 2003 REPRESENTING
AROUND TWENTYEIGHT-FOLD GROWTH IN SUPPLY. HOWEVER, SUPPLY OF TELEPHONE CONNECTIONS
IN INDIA WAS NEVER ADEQUATE TO MEET THE DEMAND FULLY IN ANY OF THE LAST OVER 22 YEARS.
4.14 WIRELESS IN LOCAL LOOP (MOBILE) SERVICE VS. CELLULAR MOBILE TELEPHONE SERVICE
BASED ON TRAI’S RECOMMENDATIONS OF 8 JANUARY 2001, DOT ALLOWED IN JANUARY 2001
THE BASIC SERVICE PROVIDERS (BSPS) TO PROVIDE MOBILITY TO THEIR SUBSCRIBERS
RESTRICTED TO LOCAL AREA I.E. SHORT DISTANCE CHARGING AREA (SDCA). HOWEVER, CELLULAR
MOBILE SERVICE PROVIDERS (CMSPS) CHALLENGED THIS DECISION OF DOT IN THE TELECOM
DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL (TDSAT), PARTICULARLY ON THE GROUND
THAT THE DECISION WAS AGAINST THE NTP-99. INITIALLY TDSAT DISMISSED CMSPS’ PETITION
ON 15 MARCH 2002 BUT ON THE DIRECTION OF HON’BLE SUPREME COURT OF INDIA TO
RECONSIDER THE MATTER ON SPECIFIC POINTS, TDSAT ON 8 AUGUST 2003 OBSERVED THAT IT
WAS IMPORTANT TO ENSURE THAT MOBILITY OF WLL (M) SERVICE REMAINED RESTRICTED TO
SDCA AND NO HANDOVER FROM ONE SDCA TO ANOTHER WAS ALLOWED UNDER ANY
CIRCUMSTANCE. TDSAT FURTHER OBSERVED THAT TRAI SHOULD CONSIDER ISSUING
RECOMMENDATIONS TO GOVERNMENT ON THE FOLLOWING ISSUES TO RESOLVE THE MATTER
BETWEEN WLL (M) OPERATORS AND CELLULAR MOBILE OPERATORS:
·ADDITIONAL ENTRY FEE PAYABLE BY BSPS FOR PROVIDING WLL (M) SERVICE,
·ADDITIONAL SPECTRUM FEE CHARGEABLE FOR THE ADDITIONAL SPECTRUM BEYOND 5 MHZ
FOR WLL (M) SERVICE,
·RELIEF TO CELLULAR MOBILE OPERATORS WITH REGARD TO POINTS OF INTERCONNECTION
BETWEEN CMSPS AND BSPS, AND
·INCREASING THE RETENTION OF 5 PER CENT ACCESS CHARGE TO A REASONABLE LEVEL.
ACCORDINGLY, DOT ON 18 AUGUST 2003 SOUGHT TRAI’S RECOMMENDATIONS ON THE ABOVE
ISSUES. THEREAFTER, ON 28 AUGUST 2003 TRAI HAS RELEASED A CONSULTATION PAPER TO ALL
70

71. STAKEHOLDERS FOR OBTAINING THEIR FEEDBACK ON THESE ISSUES BEFORE IT FORMULATES
RECOMMENDATIONS TO THE GOVERNMENT.
4.15 THE PICTURE AHEAD
WITH THE RAPID UP GRADATION OF TECHNOLOGY AND THE ENTRY OF PRIVATE PLAYERS IN THE
TELECOM SECTOR IT IS EXPECTED THAT THE COMPETITIVE ENVIRONMENT WILL LEAD TO GREATER
FACILITIES FOR THE SUBSCRIBERS AT LOWER COST. EVEN BY WAY OF COVERAGE, THE TELE-DENSITY
IS PROPOSED TO BE INCREASED FROM THE PRESENT 5.72 TELEPHONES PER HUNDRED
POPULATIONS TO 7 BY 2005 AND TO 15 BY 2010.


5. INDIAN TELECOM
5.1:- MARKET OVERVIEW
5.2:- MARKET TRENDS
5.3:- COMPETITION
5.4:- SALES PROSPECTS
5.5:-MARKET ACCESS
5. 6:-TELECOM EXHIBITIONS
71

72. The Wireless Planning and Co-ordination wing of the Department of
Telecommunications allocates
72
5.0 SUMMARY
THE INDIAN TELECOMMUNICATIONS NETWORK WITH 70 MILLION CONNECTIONS IS THE FIFTH LARGEST
IN THE WORLD AND THE SECOND LARGEST AMONG THE EMERGING ECONOMIES OF ASIA. TODAY, IT
IS THE FASTEST GROWING MARKET IN THE WORLD AND REPRESENTS UNIQUE OPPORTUNITIES FOR
INTERNATIONAL COMPANIES IN THE STAGNANT GLOBAL SCENARIO. THE TOTAL SUBSCRIBER BASE IS
EXPECTED TO REACH 203 MILLION IN 2007. THE WIRELESS SUBSCRIBER BASE HAS JUMPED FROM
1.6 MILLION IN 1999 TO 28.2 MILLION IN 2003. IN THE LAST 3 YEARS, TWO OUT OF EVERY
THREE NEW TELEPHONE SUBSCRIBERS WERE WIRELESS SUBSCRIBERS. CONSEQUENTLY, WIRELESS
NOW ACCOUNTS FOR 40% OF THE TOTAL TELEPHONE SUBSCRIBER BASE, AS COMPARED TO ONLY
9.5% IN 2000. WIRELESS SUBSCRIBER GROWTH IS EXPECTED TO ACCELERATE FURTHER FROM 2
MILLION NEW SUBSCRIBERS PER MONTH NOW TO 2.5 MILLION BY 2005.
GIVEN THE PERSISTENT LOW TELEPHONE PENETRATION RATE OF ABOUT 7 PER ONE HUNDRED AND
HIGH LEVELS OF OVERALL ECONOMIC GROWTH, THE TELECOM SECTOR OFFERS VAST POTENTIAL.
THE MOBILE MARKET RECENTLY TOPPED 31 MILLION CUSTOMERS. IT IS THEREFORE NOT
SURPRISING THAT INDIA IS ONE OF THE FASTEST GROWING TELECOM MARKETS WITH AN AVERAGE
ANNUAL GROWTH OF ABOUT 22% FOR BASIC TELEPHONY AND OVER 100% FOR CELLULAR AND
INTERNET SERVICES.
RECOGNIZING THAT THE TELECOM SECTOR IS ONE OF THE PRIME MOVERS OF ECONOMY, THE
GOVERNMENT'S REGULATORY AND POLICY INITIATIVES HAVE BEEN DIRECTED TOWARDS ESTABLISHING
A WORLD-CLASS TELECOMMUNICATIONS INFRASTRUCTURE. CAPITAL REQUIREMENTS ARE
CONSIDERABLE. INDIA REQUIRES INVESTMENTS OF AT LEAST $37 BILLION BY 2005 AND $69
BILLION BY 2010.
THE TECHNOLOGIES CURRENTLY IN USE ARE GLOBAL SYSTEM FOR MOBILE COMMUNICATIONS
(GSM) AND CODE DIVISION MULTIPLE ACCESS (CDMA). THERE ARE PRIMARILY 10
COMPANIES PROVIDING MOBILE SERVICES IN 19 TELECOM CIRCLES AND 4 METRO CITIES, COVERING
2000 TOWNS ACROSS THE COUNTRY. PRESENTLY THERE ARE 4 GSM OPERATORS AND 2
CDMA OPERATORS IN EACH CIRCLE. THERE ARE 100 STATE-OF-THE-ART NETWORKS (GSM +
CDMA) ON AIR WITH A TOTAL INVESTMENT OF $8 BILLION.

73. spectrum in accordance with the National Frequency Allocation Plan (NFAP). The
NFAP is revised every two years according to the radio regulations of ITU.
According to the frequency plan, the frequency band 824-844 MHz paired with
869-889 MHz has been earmarked for CDMA operators; 890-915 paired with
935-960 MHz has been earmarked for GSM mobile operators; 1710-1785 MHz
paired with 1805-1880 MHz is also reserved for GSM and CDMA operators.
73

74. Despite the regular concessions to the private operators and the rapid pace at which
74
5.1 MARKET OVERVIEW
THE GROWTH TRENDS IN INDIAN TELECOM MIRROR THOSE IN THE GLOBAL INDUSTRY. WIRELESS
HAS BEEN THE PRINCIPAL GROWTH ENGINE, ACCOUNTING FOR TWO-THIRDS OF THE TOTAL TELECOM
SUBSCRIBER ADDITIONS DURING THE LAST THREE YEARS. THE INDIAN TELECOM INDUSTRY IS
POISED TO GROW EXPONENTIALLY. WIRELESS SECTOR WILL BECOME STRONGER IN THE UNIFIED
LICENSING ENVIRONMENT, AND WIRELESS HAS ALREADY SURPASSED WIRE LINE CONNECTIONS.
TELEDENSITY WILL CROSS 20 PERCENT IN THE NEXT FIVE YEARS, BEATING THE GOVERNMENT OF
INDIA’S TARGET BY THREE YEARS, WHILE TELECOM REVENUES WILL ALMOST TRIPLE FROM $9
BILLION IN 2003 TO $23-25 BILLION BY 2007.
THE WIRELESS REVOLUTION WILL BE FUELLED BY SEVERAL FACTORS. THE AFFORDABILITY OF
WIRELESS FOR THE MASSES WILL BE SUSTAINED ON ACCOUNT OF LOW TARIFFS, CHEAP HANDSETS
AND ATTRACTIVE FINANCING SCHEMES. WIRELESS OPERATORS WILL CONTINUE TO FOCUS ON
PREPAID PRODUCTS IN ORDER TO INCREASE THE ADOPTION OF WIRELESS AMONG THE LOWER
MIDDLE INCOME AND LOW-INCOME GROUPS. WIRELINE USERS WILL INCREASINGLY MIGRATE TO
WIRELESS, LURED BY THE BENEFITS OF MOBILITY AND THE ATTRACTIVE BUNDLED PLANS THAT ARE
BEING LAUNCHED BY THE WIRELESS OPERATORS. WIRELESS DATA SERVICES WILL ALSO BECOME A
GROWING REVENUE STEAM. SOME OPERATORS HAVE ALREADY DEPLOYED 3G TECHNOLOGIES ON
THEIR NETWORKS. WITH FURTHER ROLLOUT, IT WILL ACCOUNT FOR A SIGNIFICANT PORTION OF THE
WIRELESS REVENUE PIE.
AS OF FEBRUARY 2004 THE TOTAL MOBILE MARKET HAD REACHED 31.67 MILLION, OF WHICH
24.65 MILLION SUBSCRIBERS WERE GSM AND 7.02 MILLION WERE CDMA (EXCLUDING BHARAT
SANCHAR NIGAM LIMITED [BSNL] AND MAHANAGAR TELEPHONE NIGAM LIMITED [MTNL]). OF
THESE TOTALS, RELIANCE INFOCOMM HAD 6.822 MILLION SUBSCRIBERS (6.065 CDMA AND
0.757 GSM), BHARTI HAD 6.199 MILLION (GSM), BSNL HAD 4.954 MILLION, (GSM)
HUTCH HAD 4.826 MILLION (GSM), AND IDEA CELLULAR HAD 2.584 MILLION (GSM). MOBILE
CONNECTIONS HAVE REACHED TO 56 MILLION BY THE END OF 2004, REPRESENTING A 96 PER
CENT INCREASE OVER 2003, ACCORDING TO GARTNER. AS PER THE CELLULAR OPERATORS
ASSOCIATION OF INDIA, GSM MOBILES PHONE WILL REACH 471 MILLION BY 2010. THE PACE OF
GROWTH WILL ACCELERATE WITH THE INTRODUCTION OF “FULL MOBILITY” CDMA LOOP SERVICES
AND THE ADOPTION OF UNIFIED LICENSES.
5.2 MARKET TRENDS
THE MARKET FOR TELECOM SERVICES IN 2002-03 HAS BEEN ESTIMATED TO BE $10.7 BILLION.
THE EQUIPMENT MARKET IS ESTIMATED TO HAVE REACHED A TURNOVER OF $6.27 BILLION IN
2002-03, UP FROM $5.71 BILLION IN 2001-02. THE TELECOM INDUSTRY COMPRISING
SERVICES AND EQUIPMENT IS EXPECTED TO INCREASE TO $24.29 BILLION BY 2006.
PRIVATE PLAYERS ARE STEADILY ACQUIRING AN INCREASING SHARES OF THE TELECOM SERVICES
MARKET. TEN YEARS AFTER THE SECTOR WAS OPENED TO PRIVATE PARTICIPATION, THEY ACCOUNT
FOR MORE THAN A THIRD OF THE TOTAL SUBSCRIBER BASE IN INDIA. PRIVATE OPERATORS PLAY
THE LARGEST ROLE IN MOBILE SERVICES, WHERE THE 10 COMPANIES THAT OWN MORE THAN 70

75. 75
acquisition of AT&T’s stake will give BPL flexibility in approaching other financially
strong investors. Telesystem International Wireless of Canada sold its 27.5%
stake in Hexacom, operator of mobile services in Rajasthan, to Hexacom. First
Pacific sold its 49% stake in Escotel to Idea Cellular. And Qualcomm dropped
plans to invest $200 million for a 4% equity stake in Reliance Infocomm.

5.3 COMPETITION
AS NOTED EARLIER, THE GOVERNMENT INITIALLY ONLY PERMITTED TWO OPERATORS IN EACH
CIRCLE. BUT THE GOVERNMENT HAS NOW MOVED TO UNRESTRICTED ENTRY AND UNLIMITED
COMPETITION IN ALL TYPES OF SERVICES. AS A RESULT, THERE ARE NOW MULTIPLE OPERATORS
IN EACH SERVICE AND IN EACH LICENSE AREA. THE ENTRY OF ADDITIONAL OPERATORS
(TYPICALLY BSNL OR MTNL) HAD LED TO DRASTIC TARIFF REDUCTIONS. INDEED, THE
COMPETITION WAS SO INTENSE THAT THE TELECOM REGULATORY AUTHORITY OF INDIA (TRAI)
STOPPED SETTING THE PRICE FOR MOBILE SERVICES AND ALLOWED THE MARKET TO SET PRICES.
THE UNIFIED ACCESS LICENSE AND THE LIBERAL TAKEOVER AND FOREIGN DIRECT INVESTMENT
NORMS ARE EXPECTED TO CATALYZE CONSOLIDATION. IN ADDITION, IN EARLY 2004, TRAI
PUBLISHED NORMS THAT WOULD, UNDER CERTAIN CONDITIONS, ALLOW INTRA-CIRCLE MERGERS
(I.E., AT THE REGIONAL LEVEL) BETWEEN OPERATORS. MERGERS WILL BE ALLOWED, FOR
EXAMPLE, IF THE NEW ENTITY DOES NOT HAVE A MARKET SHARE ABOVE 50%, OR IF THE TOP
TWO FIRMS IN A GIVEN CIRCLE DOES NOT TOGETHER ACCOUNT FOR A MARKET SHARE OF 75%
OR HIGHER. IF THESE CONDITIONS ARE NOT MET, TRAI HAS ASKED THE DOT TO CONDUCT A
DETAILED IMPACT STUDY ON THE PROPOSED MERGER BEFORE GRANTING ITS APPROVAL.
THE COMPETITIVE NATURE OF THE INDIAN MARKET LEADS ANALYSTS TO PREDICT THAT THERE WILL
BE A SPATE OF TAKEOVERS AT THE NATIONAL LEVEL IN 2004 AND 2005, AND THAT ONLY THE
LARGE OPERATORS - BSNL/MTNL, RELIANCE INFOCOMM, TATA, HUTCHISON-ESSAR, IDEA
AND BHARTI - WILL SURVIVE. THE CONSOLIDATION HAS ALREADY BEGUN. AIRCEL, WHICH
OPERATES GSM MOBILE SERVICES IN THE SOUTHERN STATE OF TAMIL NADU (EXCEPT
CHENNAI), HAS IN 4Q03 TAKEN 100% STAKE IN RPG CELLULAR IN THE CITY OF CHENNAI.
AIRCEL WILL NOW BE ABLE TO OFFER SERVICES IN THE CAPITAL CITY ALSO. AIRCEL HAD
475,705 CUSTOMERS IN TAMIL NADU WHILE RPG CELLULAR HAS 212,823 CUSTOMERS IN
CHENNAI.
A. IDEA CELLULAR
, THE THREE-WAY JOINT VENTURE BETWEEN THE TATA GROUP, THE ADITYA BIRLA GROUP AND
AT&T, HAS SIGNED A PURCHASE AGREEMENT TO BUY 100% STAKE IN ESCOTEL, WHICH
OPERATES IN THE SIX STATES OF KERALA, HARYANA AND UP (WEST), UTTAR PRADESH (EAST),
RAJASTHAN AND HIMACHAL PRADESH. THE SUBSCRIBER BASE IN THESE STATES EXCEEDS

76. 76

77. 77
c. BHARTI
ESTABLISHED IN 1985, BHARTI HAS BEEN A PIONEERING FORCE IN THE TELECOM SECTOR WITH
MANY FIRSTS AND INNOVATIONS TO ITS CREDIT, SUCH AS BEING THE FIRST MOBILE SERVICE IN
DELHI, THE FIRST PRIVATE BASIC TELEPHONE SERVICE PROVIDER IN THE COUNTRY, THE FIRST
INDIAN COMPANY TO PROVIDE COMPREHENSIVE TELECOM SERVICES OUTSIDE INDIA IN THE
SEYCHELLES, AND THE FIRST PRIVATE SECTOR SERVICE PROVIDER TO LAUNCH NATIONAL LONG
DISTANCE SERVICES IN INDIA. BHARTI TELE-VENTURES LIMITED WAS INCORPORATED ON JULY
7, 1995 FOR PROMOTING INVESTMENTS IN TELECOMMUNICATIONS SERVICES. ITS SUBSIDIARIES
OPERATE TELECOM SERVICES ACROSS INDIA.
BHARTI’S OPERATIONS ARE BROADLY HANDLED BY TWO COMPANIES: THE MOBILITY GROUP, WHICH
HANDLES MOBILE SERVICES IN 16 CIRCLES OUT OF A TOTAL 23 CIRCLES ACROSS THE COUNTRY,
AND THE INFOTEL GROUP, WHICH HANDLES THE NLD, ILD, FIXED LINE, BROADBAND, DATA, AND
SATELLITE-BASED SERVICES. TOGETHER THEY HAVE SO FAR DEPLOYED AROUND 23,000 KM OF
OPTICAL FIBER CABLES ACROSS THE COUNTRY, COUPLED WITH APPROXIMATELY 1,500 NODES,
AND HAVE PRESENCE IN AROUND 200 LOCATIONS. THE GROUP HAS A TOTAL CUSTOMER BASE OF
6.45 MILLION, OF WHICH 5.86 MILLION ARE MOBILE AND 588,000 FIXED LINE CUSTOMERS, AS
OF JANUARY 31, 2004. IN MOBILE, BHARTI’S FOOTPRINT EXTENDS ACROSS 15 CIRCLES. THE
COMPANY PLANS TO INVEST $444 BILLION IN THE CURRENT FINANCIAL YEAR. IT PLANS TO
INSTALL 29 MOBILE SWITCHING CENTERS, BUY TRANSMISSION EQUIPMENT AND ALSO ROLL OUT
NEW NETWORKS IN FIVE NEW CIRCLES WITH AN ADDITIONAL INVESTMENT OF $155 MILLION.
D. MTNL
MAHANAGAR TELEPHONE NIGAM LIMITED (MTNL) WAS SET UP ON 1ST APRIL 1986 BY THE
GOVERNMENT OF INDIA TO UPGRADE THE QUALITY OF TELECOM SERVICES, EXPAND THE TELECOM
NETWORK, AND INTRODUCE NEW SERVICES AND TO RAISE REVENUE FOR TELECOM
DEVELOPMENT NEEDS OF INDIA’S KEY METROS IN DELHI, THE POLITICAL CAPITAL, AND MUMBAI,
THE BUSINESS CAPITAL. IN THE PAST 17 YEARS, THE COMPANY HAS TAKEN RAPID STRIDES TO
EMERGE AS INDIA’S LEADING AND ONE OF ASIA’S LARGEST TELECOM OPERATING COMPANIES.
MTNL OPERATES BASIC, CELLULAR AND INTERNET SERVICES IN THE METRO CITIES OF DELHI AND
MUMBAI. THESE TWO CITIES ALREADY HAVE A HIGH TELEPHONE DENSITY COMPARED TO THE
REST OF INDIA. MTNL HAS OVER 5 MILLION SUBSCRIBERS AND 330,000 MOBILE
SUBSCRIBERS.
MTNL PLANS TO ADD 1.6 MILLION LANDLINE/CDMA PHONES AND 1.15 MILLION GSM MOBILE
PHONES BETWEEN 2002-2007. THE COMPANY PLANS TO INVEST $500 MILLION DURING
2004-2005 TO EXPAND GSM AND CDMA SERVICES.

78. E. RELIANCE INFOCOMM
RELIANCE IS A $16 BILLION CONGLOMERATE INVOLVED IN BUSINESSES RANGING FROM OIL
EXPLORATION AND REFINERY TO POWER AND TEXTILES. IT IS ALSO AN INTEGRATED TELECOM
SERVICE PROVIDER WITH LICENSES FOR MOBILE, FIXED, DOMESTIC LONG DISTANCE AND
INTERNATIONAL SERVICES. RELIANCE INFOCOMM OFFERS A COMPLETE RANGE OF TELECOM
SERVICES, COVERING MOBILE AND FIXED LINE TELEPHONY INCLUDING BROADBAND, NATIONAL AND
INTERNATIONAL LONG DISTANCE SERVICES, DATA SERVICES AND A WIDE RANGE OF VALUE ADDED
SERVICES AND APPLICATIONS. RELIANCE INDIA MOBILE, THE FIRST OF INFOCOMM'S INITIATIVES WAS
LAUNCHED ON DECEMBER 28, 2002. RELIANCE INFOCOMM PLANS TO EXTEND ITS EFFORTS
BEYOND THE TRADITIONAL VALUE CHAIN TO DEVELOP AND DEPLOY TELECOM SOLUTIONS FOR INDIA'S
FARMERS, BUSINESSES, HOSPITALS, GOVERNMENT AND PUBLIC SECTOR ORGANIZATIONS.
UNTIL RECENTLY, RELIANCE WAS PERMITTED TO PROVIDE ONLY “LIMITED MOBILITY” SERVICES
THROUGH ITS BASIC SERVICES LICENSE. HOWEVER, IT HAS NOW ACQUIRED A UNIFIED ACCESS
LICENSE FOR 18 CIRCLES THAT PERMITS IT TO PROVIDE THE FULL RANGE OF MOBILE SERVICES. IT
HAS ROLLED OUT ITS CDMA MOBILE NETWORK AND ENROLLED MORE THAN 6 MILLION SUBSCRIBERS
IN ONE YEAR TO BECOME THE COUNTRY’S LARGEST MOBILE OPERATOR. IT NOW WANTS TO INCREASE
ITS MARKET SHARE AND HAS RECENTLY LAUNCHED PRE-PAID SERVICES.
78

79. India represents a huge opportunity for handset vendors. Gray market accounts for
over 60% of the handset market in India. Despite the market for over 10 million
handsets, all handsets are imported into India. Nokia, which has a 45% MARKET
share, has not ventured to manufacture locally and has instead recently got
permission for wholesale trading of imported handsets. Samsung follows with 21%
share, Motorola has 8% share. LG, Alcatel, Sagem, Sony-Ericsson, National
Panasonic
79
F. TATA TELESERVICES
TATA TELESERVICES IS A PART OF THE $12 BILLION TATA GROUP, WHICH HAS 93 COMPANIES,
OVER 200,000 EMPLOYEES AND MORE THAN 2.3 MILLION SHAREHOLDERS. TATA TELESERVICES
PROVIDES BASIC (FIXED LINE SERVICES), USING CDMA TECHNOLOGY IN SIX CIRCLES:
MAHARASHTRA (INCLUDING MUMBAI), NEW DELHI, ANDHRA PRADESH, TAMIL NADU,
GUJARAT, AND KARNATAKA. IT HAS OVER 800,000 SUBSCRIBERS. IT HAS NOW MIGRATED TO
UNIFIED ACCESS LICENSES, BY PAYING A $120 MILLION FEE, WHICH ENABLES IT TO PROVIDE
FULLY MOBILE SERVICES AS WELL.
THE COMPANY IS ALSO EXPANDING ITS FOOTPRINT, AND HAS PAID $90 MILLION TO DOT FOR 11
NEW LICENSES UNDER THE IUC (INTERCONNECT USAGE CHARGES) REGIME. THE NEW
LICENSES, COUPLED WITH THE SIX CIRCLES IN WHICH IT ALREADY OPERATES, VIRTUALLY GIVES
THE CDMA MOBILE OPERATOR A NATIONAL FOOTPRINT THAT IS ALMOST ON PAR WITH BSNL
AND RELIANCE INFOCOMM. THE COMPANY HOPES TO START OFF SERVICES IN THESE 11 NEW
CIRCLES BY AUGUST 2004. THESE CIRCLES INCLUDE BIHAR, HARYANA, HIMACHAL PRADESH,
KERALA, KOLKATA, ORISSA, PUNJAB, RAJASTHAN, UTTAR PRADESH (EAST) & WEST AND
WEST BENGAL.
MARKET SHARE OF MOBILE SERVICE OPERATORS:
COMPANY MILLION SUBS (FEB 2004) % SHARE
RELIANCE 6.82 21.53
BHARTI 6.19 19.58
HUTCHISON 4.82 15.03
IDEA CELLULAR 3.52 11.13
BPL 1.76 5.58
SPICE 1.18 3.74
AIRCEL 0.84 2.68
TATA INDICOM 0.63 1.99
MTNL 0.40 1.29
HEXACOM 0.27 0.87
HFCL 0.02 0.08
SALES PROSPECTS
EQUIPMENT MARKET:
THE TOTAL NETWORK EQUIPMENT MARKET IS ESTIMATED AT APPROXIMATELY $6.3 BILLION IN

80. Siemens, Phillips and Mitsubishi together hold the remaining 26% market share.

The cellular sector is witnessing dynamic technology trends across the globe with
the entry of GPRS/EDGE networks and the anticipated entry of 3G networks in the
future. With voice revenues projected to shrink in the near future, GSM cellular
operators are turning to GPRS to keep their business growing. These technologies
would help enhance revenues for telecom operators by allowing data applications
such as:
Value-added services (news, stocks, sports results, weather information),
GEOGRAPHIC positioning systems (one’s whereabouts, the nearest hotel, the route
to any destination), E-commerce for micro-payments, banking,
e-mails and images
UNTIL LATE 2003, CONTINUAL LITIGATION BETWEEN GSM AND CDMA OPERATORS AROUND THE
ISSUE OF FULL VERSUS LIMITED-MOBILITY FRANCHISE RIGHTS HAD STALLED MARKET PROGRESS.
WITH THE ENDING OF LITIGATION AND THE ADOPTION OF A UNIFIED LICENSING REGIME, ALL
OPERATORS CAN NOW CONCENTRATE ON ROLLING OUT NETWORKS,
ATTRACTING SUBSCRIBERS AND IMPROVING SERVICES INSTEAD OF FIGHTING BATTLES IN THE PRESS
AND IN COURT.
INDIA’S TELECOMMUNICATIONS SECTOR IS NOW AMONG THE MOST DEREGULATED IN THE WORLD AND
PRESENTS POTENTIALLY LUCRATIVE OPPORTUNITIES FOR SERVICE PROVIDERS AND EQUIPMENT
VENDORS ALIKE. A FEW OF THE INTERNATIONAL COMPANIES THAT HAVE SUCCESSFULLY SEIZED THE
OPPORTUNITY ON BIG SCALES ARE AGILENT, CISCO, HP, HUGHES NETWORK SYSTEMS, LUCENT
80

81. TECHNOLOGIES, MOTOROLA, QUALCOMM, TEKELEC, SPRINT, AT&T, MCI, LIGHTBRIDGE, AND
UT STARCOM.
OPPORTUNITIES FOR TELECOM EQUIPMENT VENDORS
BUYER PROJECT NAME POTENTIAL U.S. EXPORT VALUE
(IN MILLIONS)
BSNL FIXED AND MOBILE NETWORK EXPANSION $2,900
MTNL FIXED AND MOBILE NETWORK EXPANSION
$120
RELIANCE RELIANCE CDMA & |OPTIC FIBER NETWORK $4,000
BHARTI BHARTI TELE-VENTURES
$250

IDEA IDEA GSM ROLLOUT $1,100
HEXACOM EXPANSION OF GSM NETWORK IN RAJASTHAN $10

HUTCHISON HUTCHISON-ESSAR GSM NETWORK EXPANSION
$400

BPL GSM EXPANSION $700
TATA EXPANSION OF CDMA FIXED AND MOBILE SERVICES $4,000

5.1 1 INDIAN COMMUNICATION EQUIPMENT INDUSTRY:
81

82. CATEGORY REVENUE IN US$ MILLION GROWTH
FY 2002-03 FY 2001-02
(STATED AS %)
CARRIER EQUIPMENT
PRODUCT 2,813
SERVICES 522
ENTERPRISE EQUIPMENT
PRODUCT 897 828
1.39
SERVICES 158 127
21.99
OTHERS

GSM PHONES 398 224
78.07
CDMA PHONES 125
T&M 65 49
34.09
TELECOM SOFTWARE 1238 1038
19.25
82

83. CELLULAR SERVICE 243 161
50.05
OTHERS 1886 1466
28.65
ACCORDING TO JP MORGAN STANLEY, THE CELLULAR SEGMENT WILL BE A KEY DRIVER IN THE
GROWTH IN TELECOM SERVICES IN INDIA. THE SHARE OF PUBLIC OPERATORS IN THIS MARKET IS
LIKELY TO DIMINISH AND COMPETITION WOULD ESTABLISH ITSELF FASTER AND GET A BIGGER CHUNK
OF THE MARKET. THIS WOULD BE LED BY FURTHER LIBERALIZATION, INCREASING CUSTOMER
EXPECTATIONS, CONVERGENCE OF TECHNOLOGIES, AND THE ABILITY OF PRIVATE PLAYERS TO OFFER
IT TO THE MARKET FASTER THAN THE INCUMBENT OPERATOR. THE MARKET SHARE OF CDMA
SERVICES WOULD INCREASE CONSIDERABLY, WITH RELIANCE DEPLOYING IT ON A NATIONAL SCALE
AND USING IT AS THEIR PRIMARY SERVICE OFFERING. TELECOM SERVICE PROVIDERS ARE
INCREASINGLY FOCUSING ON CORPORATE TELECOM SERVICES. THOUGH RETAIL CONTRIBUTES MORE
THAN 95 PERCENT OF THE MARKET, IT IS THE REMAINING 4-5 PERCENT OF THE MARKET, WHICH IS
GETTING MORE IMPORTANT FOR REVENUE GENERATION.
5.4 MARKET ACCESS

IN ORDER FOR INTERNATIONAL COMPANIES TO ENTER THE MOBILE SERVICES IN INDIA, THEY HAVE TO
COMPLETE THE FOLLOWING FORMALITIES:
FIND A JV PARTNER (INDIAN COMPANY) WHO WILL HAVE 51 PERCENT STAKE;
IF A NEW COMPANY, IT HAS TO FILE FOR UNIFIED ACCESS SERVICE LICENSE;
83

84. ONE TIME ENTRY FEE OF RANGING FROM $ 0.44 TO $44 MILLION, DEPENDING ON THE CIRCLE;
QUARTERLY REVENUE SHARE (AS PART OF LICENSE FEE): RANGING FROM 6-10% DEPENDING ON
THE CIRCLE;
PERFORMANCE BANK GUARANTEES WHICH IS EQUIVALENT TO FOUR TIMES THE REVENUES/LICENSE
FEE.

IN ADDITION TO LICENSE FEES, THE CELLULAR LICENSEES PAY SPECTRUM CHARGES ON A REVENUE
SHARE BASIS OF 2% OF AGR FOR SPECTRUM UP TO 4.4 MHZ OR 3% OF AGR FOR SPECTRUM
UP TO 6.2 MHZ THE CHARGES WILL BE 4% OF AGR FOR SPECTRUM BEYOND 6.2 MHZ,
WHICH SHALL BE GIVEN IF THE SUBSCRIBER BASE IS MORE THAN 500 THOUSAND.
IN TERMS OF NTP-99, CELLULAR OPERATORS WILL BE FREE TO PROVIDE, WITHIN THEIR AREA OF
OPERATIONS, ALL TYPES OF MOBILE SERVICES, INCLUDING VOICE AND NON-VOICE MESSAGES, DATA
SERVICES AND PCOS UTILIZING ANY TYPE OF NETWORK EQUIPMENT, INCLUDING CIRCUIT AND/OR
PACKAGE SWITCHES THAT MEET THE RELEVANT INTERNATIONAL TELECOMMUNICATION UNION (ITU)/
TELECOM ENGINEERING CENTER (TEC) STANDARDS.

THE TELECOM SECTOR HIGHLY CAPITAL-INTENSIVE AND REQUIRES HUGE INVESTMENTS OVER A
PROLONGED PERIOD OF TIME. SEVERAL DOMESTIC OPERATORS AND OVERSEAS INVESTORS WANT:
84

85. 85
- FDI limit to be increased from the present cap of 49% to 74% and the same
has been done.
Investments by FIIs to be exempt from the sect oral limit imposed on FDI.
There are a few other market barriers for entry into the Indian mobile services
market, such as:
- High import duty on hand sets and infrastructure import ranging between
20-40 percent
- Huge entry/license fees
- Lack of adequate spectrum for expansion of wireless services
- Lack of coherent policy on spectrum management and allocation.
Upcoming Trade Shows in the Telecom sector

86. 6. RESEARCH OBJECTIVE
Marketing research is a systematic collection, analysis, interpretation and reporting
marketing managers to solve some marketing opportunities. This particular research
study was undertaken and design with some predetermined objectives. The main
objective of the study is to evaluate the” Penetrate the Market for BSNL.
The objectives of the research are:
To know about the popularity of BSNL plan among the consumers in India
To know about the brands of GSM and their market capitalization.
To study about the competitive strength of BSNL.
To know about the consumer’s preferences and expectations with regard to
the choice of GSM SIM for various plan of BSNL
To motivate the dormant retailers for continuing trade with BSNL
To create awareness in dormant retailers about benefits which offered by
BSNL to small retailers directly or indirectly?
To know about the visibility of nearest competitors or rivals of BSNL in the
Rajasthan market.
7. RESEARCH METHODOLOGY
Research methodology is the way to systematically solve the research problem. It
may be understand as a science of studying how research is done scientifically. In it
I study the various steps that are generally adopted by a researcher in his research
problem along with the logic behind them. It is necessary for the researcher to know
not only the research method but also the methodology.
I not only talk off research method but also consider the logic behind the methods.
The use in conduct of my research study and explain why I am using a particular
86

87. matter for technique and why I am using others. So those research results are
capable for being well evaluated by others.
7.1 Research Design:
Research design is the arrangement of conditions for collection & analysis in
a manner that aims to combine relevance to the research purpose with
economy in procedure.
7.2 Research Instruments: -
A complete questionnaire is prepared on the basis of consumer behavior &
satisfaction with regard to radial tires.
The questionnaire was designed keeping the following point / question in mind:

Is the question required?
Has the respondent experienced the situation described in the question?
Is the question testing the respondent’s memory?
Is the respondent likely to remember such information?
Will the respondent part with the information voluntary?
Can a single question be fragmented into small but multiple questions for better
understanding?
7.3 Sampling Plan: -
a) Sample method: Non-probability sampling (random & stratified)
87

88. Sample Size: 20 colleges & 200 dormant retailers of handsets in prepaid sales.
There are near about 225 educational institutions in Raipur including all technical
and professional institutions. So for 1
st
project I select 20 colleges including boys
and girls colleges, technical and non-technical colleges, professional and non
professional institutions. Hence in this project sample size is around one fourth of
population size. In the 2
nd
project we cannot go with sampling. We just collect
information about dormant retailers and ask question accordingly questionnaire.
A definite plan was drawn up for obtaining a sample from different areas of
educational institute of Jaipur.and sawaimadhopur Thus sample size has been
determined using a particular method. The availability of resources in terms of
infrastructure of field force. Time and cost was also taken into account.
Sampling Frame: - The sampling frame is the whole population since is based
on the selling behavior of all units’ presents in the population that is the
targeted to all the units in the population.
The process involved breaking up the various types educational institute of Jaipur
& Sawaimahdhopur city. This division was made in such a way that each one major
area of education get place in the study, be it technical or professional or other area
of study. There by each of these areas of study sample were drawn randomly or by
stratified sampling.
b) Sample Design: -
A sample design is a definite plan for obtaining technique or procedure. The
researcher would adopt in selecting items for the sample.
7.4 Types of sample design: -

88

89. Random sampling: - In random sampling, each of the population has a definite
reassigned probability of being selected in the sample.
Stratified sampling: - Under stratified sampling the population is divided into several
sub population (strata) that are individually more homogeneous than the total
population & then select items from each stratum to constitute a sample.
7.5 Data collection: -
Since the study, undertaken by me is descriptive research, I have
concentrated on primary data through survey and collection secondary data.
7.6 Source of data collection:
Data is collected from two methods: -
a)Primary data: -
b) The questionnaire for data collection according to the information required from
the consumers was designed. The region undertaken for the research is Jaipur
Sawaimadhopur (Raj.). Different areas selected for collection of data through
questionnaire and interviews.
b) Secondary data: - Secondary data is collected from books, newspaper,
magazine and websites.
8. COMPARATIVE SWOT ANALYSIS
Structural changes have had a positive impact on the telecommunications sector
and a compound annual growth rate (CAGR) of 13.42 percent is estimated for
2002-2006. The future of the industry lies in the mainline and cellular segments and
constant technological innovations such as Internet Protocol (IP) based services.
The telecom sector in India has been witnessing a continuous process of reforms
since 1991. With the opening of international long distance services and internet
telephony from April, 2002, the process of liberalization and opening up the sector
for competition is complete. Convergence of services is a major new emerging area
and the telecom sector will have to address this in the Tenth Plan.
89

90. BSNL is a major player in the rapidly growing Indian wireless market, as well as an
emerging leader among GSM operators worldwide.
8.1 How to Perform a Swat Analysis
A SWOT Analysis is an integral part of a marketing plan and can also be part of a
business plan. Knowing what a SWOT Analysis is and how to perform one is very
important.
8.2 What is a SWOT Analysis?
A SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a tool used to
provide a general or detailed snapshot of a company's health. A SWOT analysis
stands for Strengths, Weaknesses, Opportunities, and Threats and is a simple and
powerful way to analyze your company's present marketing situation. The best way
to understand SWOT is to look at an actual example
8.3 Why use a SWOT Analysis?
In any business, it is imperative that the business be its own worst critic. A SWOT
analysis forces an objective analysis of a company's position vies a Vis its competi-
tors and the marketplace. Simultaneously, an effective SWOT analysis will help de-
termine in which areas a company is succeeding, allowing it to allocate resources in
such a way as to maintain any dominant positions it may have. Below are numer-
ous, current example SWOT analyses for sale.
a) Strengths
1.Knowledge. BSNL is ranked fastest growing company in Rajasthan state.
2.Relationship selling. We get to know our customers, one by one. Our direct
sales force maintains a relationship.
90

91. 3.History. It has loyalty of customers and vendors. It is local.
4.The other company in telecom sector was merged different companies. But
BSNL did not take over any small telecom company. It establishes and devel-
op broad network on its own. It has 5, 58,510 mobile user till July, 2005.
b) Weaknesses
1.Company has a large physical network, so some times it is very difficult to
manage all this in an idle manner.
2.In comparison to strong competitors the visibility of BSNL is not satisfactory.
c) Opportunities
1.The financial strength of this is a backbone of India
2.Training. The company provides in-depth training to their employees and
frontline sales executives.
3.Service. As BSNL target market needs more service, the competitors are less
likely than ever to provide it. Their business model doesn't include service,
just selling.
4.The large number of population which have still do not have mobile could be
target customer of BSNL
5.The brand image of BSNL is strong plus point with BSNL so it is a great op-
portunity in front of Reliance infocomm that they should avail this brand im-
age.
d) Threats
1.The strong competitors of BSNL Rim, Airtel just signed an agreement with
Nokia by which Airtel will increase its network across country.
2.Some companies like Idea planning to open its services in Rajasthan. So
coming time is going to be very tough and competitors.
91

92. 9. Reactivation of Dormant Retailers
In today’s business scenario retailers play a vital role in physical distribution channel
of every company. Retailers make a strong bond between customers and
organization. Today’s retailers are becoming harder to please. They are smarter,
more demanding, less forgiving. The challenges are not to produce retailer’s chain.
The challenges are to retain the retailers.
It is not enough to attracting new retailers; the company must keep them and
increase their business. Too many companies suffer from high retailers’ defection. It
is like adding water to a leaking bucket.
There are some steps to reduce the defection rate. First, the company must define
and measure its retention rate. Second, the company must distinguish the cause of
retailers’ attrition and identify those that can be managed better. Third, the company
needs to estimate how much profit it loses when it loses retailers.
Unfortunately, most marketing theory and practices centers on the art of attracting
new retailers rather than on retaining and cultivating existing ones. The traditionally
has been on making sales rather than building good relationship between retailers
and company.
In this study I have cover ten zones of Jaipur & sawaimadhopur city and ask
question to small retailers according to questionnaire. All retailers came out with
different views and express why they stop trading with Direct sales associate i.e.
Advent Communication. Many of them still dealing in BSNL products but they
purchase from outside
Zone one covers Adarsh nagar, Jawahar nagar, Raja Park, Janta colony and
Transport nagar. Zone two covers Malviya nagar, Jagatpura and Bapu nagar. Zone
three covers Durgapura, Sanganer and Tonk road. Zone four covers Johri bazaar,
Brahmpuri, Amer and Ramganj. Zone five covers Mashesh nagar, Mansarover,
Aggarwal farm and new sanganer road. Zone six covers Ajmer road, Hasanpura,
Hawa sarak, Sodala and Vaishali nagar. Zone seven covers Bani park, Shastri
92

93. nagar and Station road. Zone eight covers Jhotwara, Kalwar road, Murlipura,
Harmada and Sikar road.
Zone nine consist C scheme, Jayanti market, Raiser plaza and M I road. Zone ten
covers Chandpole, Gangori bazaar, Kishanpole bazaar, Choura Rasta and
Chaugan stadium.
And in Sawaimadhopur – Kherda, Bajriya, Adrsh Nagar , MP colony ,Mena colony,
P.G. college sawaimadhopur and nearest village, So I have cover all above
mentioned area and find some surprisingly facts that some very very big retailers
create such kind of problem. Big players of market purchase BSNL products from
Advent communication and get additional benefits given by BSNL. And then they
give these sets to small retailers at cutting their own discount at lower price. In this
situation small retailers become sick due to price discrimination, lack of demand and
less margin and profit. So they either stop to sale BSNL products or switch over to
other place to purchase BSNL products.



93
Reasons No of Retailer
Other Reason 5
Focused on Core Business 10
Lack of Demand and Less Margin 12
Price Discrimination 9
Frequent Changes in Schemes 13
Services is not Up to the Mark 7

94. Table: 1- Retailers List of Zone 1
Table: 2- Retailers List of Zone 2
Zone 2
Reasons No of Retailer
Other Reason 5
Focused on Core Business 4
Lack of Demand and Less Margin 10
Price Discrimination 14
Frequent Changes in Schemes 8
Services is not Up to the Mark 7
94
REASONS FOR STOPPING TRADE OF ZONE 1
9%
18%
21%
16%
23%
13%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark
REASONS FOR STOPPING TRADE OF ZONE 2
10%
8%
21%
29%
17%
15%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark

95. Table: 3 –Retailers list of Zone 3
Zone 3
Reasons No of Retailer
Other Reason 5
Focused on Core Business 4
Lack of Demand and Less Margin 7
Price Discrimination 11
Frequent Changes in Schemes 6
Services is not Up to the Mark 5
95
REASONS FOR STOPPING TRADE OF ZONE 3
13%
11%
18%
29%
16%
13%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark

96. Table: 4 –Retailers list of Zone 4
Table: 5 –
Retailers list
of Zone 5
96
Zone 4
Reasons No of Retailer
Other Reason 8
Focused on Core Business 3
Lack of Demand and Less Margin 12
Price Discrimination 14
Frequent Changes in Schemes 5
Services is not Up to the Mark 9
Zone 5
Reasons No of Retailer
Other Reason 78
Focused on Core Business 40
Lack of Demand and Less Margin 125
Price Discrimination 110
Frequent Changes in Schemes 49
Services is not Up to the Mark 66
REASONS FOR STOPPING TRADE OF ZONE 4
16%
6%
24%
26%
10%
18%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark
REASONS FOR STOPPING TRADE OF ZONE 5
12%
5%
35%
23%
9%
16%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark

97. Table: 6 –Retailers list of Zone 6
Zone 6
Reasons No of Retailer
Other Reason 5
Focused on Core Business 2
Lack of Demand and Less Margin 17
Price Discrimination 8
Frequent Changes in Schemes 7
Services is not Up to the Mark 12
Table: 7 –Retailers list of Zone 7
Zone 7
Reasons No of Retailer
Other Reason 11
Focused on Core Business 10
Lack of Demand and Less Margin 9
Price Discrimination 10
Frequent Changes in Schemes 5
Services is not Up to the Mark 8
97
REASONS FOR STOPPING TRADE OF ZONE 6
10%
4%
32%
16%
14%
24%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark

98. Table: 8 –Retailers list of Zone 8
Zone 8
Zone 8 No of Retailer
Other Reason 15
Focused on Core Business 7
Lack of Demand and Less Margin 7
Price Discrimination 15
Frequent Changes in Schemes 4
Services is not Up to the Mark 6
98
REASONS FOR STOPPING TRADE OF ZONE 7
21%
19%
17%
19%
9%
15%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark
REASONS FOR STOPPING TRADE OF ZONE 8
28%
13%
13%
28%
7%
11%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark

99. Table: 9 –Retailers list of Zone 9
Zone 9
Reasons No of Retailer
Other Reason 10
Focused on Core Business 5
Lack of Demand and Less Margin 8
Price Discrimination 15
Frequent Changes in Schemes 4
Services is not Up to the Mark 7
Table: 10–Retailers list of Zone 10
Zone 10
Reasons No of Retailer
99
REASONS FOR STOPPING TRADE OF ZONE 9
20%
10%
16%32%
8%
14%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark

100. Other Reason 9
Focused on Core Business 4
Lack of Demand and Less Margin 8
Price Discrimination 7
Frequent Changes in Schemes 3
Services is not Up to the Mark 5
Findings &
conclusions
BSNL offered some attractive plans only for big player of the market, which
purchases the products in bulk so that small retailer of the market suffered
from lack of demand and other problems.
In almost ten zones above twenty per cent retailers express that price dis-
crimination is the basic cause to stop trade with of BSNL. Some big retailers
offered the same product at lower price. They directly or indirectly entertain
the benefits offered by company.
Almost twenty percent said that they focused on core business because it’s
negatively affecting their core business. So their overall sales decreased.
Frequent change in schemes also make uncomfortable to focused on core
business
Ten to fifteen per cent retailers are not satisfied with the services provided by
of BSNL. Particularly in area small retailers are not satisfied with salesman
services. Sometimes salesman did not give additional benefits offered by
company whereas some retailers demanded hoarding and other things.
Almost more than twenty five percent retailers are suffered from lack of de-
mand and less margin. If a same product available at cheaper rate at big
100
REASONS FOR STOPPING TRADE OF ZONE 10
26%
11%
22%
19%
8%
14%
Other Reason Focused on Core Business
Lack of Demand and Less MarginPrice Discrimination
Frequent Changes in Schemes Services is not Up to the Mark

101. players shop then why they purchased from small shops. Price discrimination
is in the root of lack of demand.
Less than ten percent stop trade due to other reasons like some suffered
from financial problems, some opened a new business and some due to fa-
miliar problems.
10. Suggestions
BSNL should also plane such kind of schemes, which are benefited to small re-
tailers. Big players of the market later on directly or indirectly affect the sale and
performance of company and direct sales associates.
BSNL can start a training and awareness programme for small retailers
.make sure that its salesman maintain its brand name and prestige of company.
Company should not change the schemes frequently because it creates uncom-
fertability among small retailers.
11. Annexure
BSNL Sales Coverage in Education Institutions of
. Jaipur. & Sawaimadhopur
101

102. 1. Name of the College:
Courses OfferedNo. of SeatsNo. of BoysNo. of GirlsLocalitiesOutsiders
i i
2. No. of Faculty Members:
\3. Hostel Facility: a) Yes b) No
If Yes,
No. Of Hostellers No. Of Boys No. Of Girls
4. Canteen: a) Yes b) No
a) Telecom Operator Available.
BSNL RIM Airtel Hutch Tata-indicom
b) Can we place BSNL stocks?
Yes No
If Yes, Contact Person: _____
Tel. No.: _______________
5. Nearest Telecom Retailers:
Name: 1_________________________________2__________________________
Address:
Tel. No.:
Distance from college:
102

103. 6. Nearby Markets: l.________________ Distance
2.________________
7. A) Visibility of BSNL
Excellent Good Average Bad
8. A) Availability of Other Operators:
Airtel Vodaphon Rim Tata-inadicom
b) Visibility of Other Operators:

Airtel Vodaphon RIM Tata-inadicom
9. Remarks:________________________________

_________________________
RETAILERS RETENTION
1.Name of the Retailers -----------------------------------------------------
2.Address --------------------------------------------------------------
3.Zone No. --------------------------------------------------------------
4.Still Deal in pro BSNL ducts (Y/N)
6. Total sales / monthly : SIM
103

104. 7. Total sales of BSNL : SIM
12. BIBLIOGRAPHY
Books:
·Agrawal M.R., Finacial Management, Garima Publication, Second
Edition 2010 .
104

105. ·Avadhani V.A., Securities Analiysis and Portfolio Management,
Himalaya Publishing House, Ninth Edition 2008.
·Chunawala S.A., Financial Management, Himalaya Publishing House,
Second Edition 2008.
·Gordon , Natarajan ,Managementof financial services ,Himalaya
Publish House,Fifth Edition 2006.
·Gupta V.k., Marketing of Financial Services, Mohit Publication, Third
Edition 2004.
·Kothari C.R, Research Methodology, New Age International Publisher,
Second Edition 2004.
·Kotler Philip, Keller Kelvin Lane, Marketing Management, New Delhi,
Published by Dorling Kindersley (India) Pvt. Ltd, Second Edition 2006.
·Max Manfred Bengamin, Method Research, Sanga Publication, New
Edition.

Magazines & Publications:
1.Economics and Business Facts for you (Jan 2009)
2.India page of HT paper (Dec. 27,2009)
3.The Business world (Feb 2009)
Websites:
1.http://www.slideshare.net/nusantara99/marketing-mnagement
2.http://en.wikipedia.org/wiki/Bharti_Airtel
3.http://www.financialexpress.com/news/airtel_brand_promotion_in_india
4.www.bsnl.co.in
5.www.punjab.bsnl.co.in/directoryofofficers.php
105

106. 106