BSNL's Employee Costs Are Eating Into Profit, Govt Mulls Ways To Bring It In Line With Jio, Airtel: Report

The government is reportedly exploring several strategies, including network upgrades and rationalising employee costs, to improve operational efficiencies within state-run telco BSNL and bolster its competitiveness against private counterparts.

What Happened: These proposed measures also encompass initiatives such as sales and distribution enhancements and the provision of value-added services, Economic Times reported, citing sources.

Reducing expenses, particularly employee benefit costs, is imperative for the state-run telecom company, which has been operating at a loss, to effectively compete with private players, officials told the publication.

Despite a significant number of employees opting for voluntary retirement after 2019, BSNL’s manpower costs remain disproportionately high. Its staff cost, as a percentage of total revenue, stood at 38.4% in FY23, significantly higher than private telecom operators.

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For instance, Reliance Jio’s employee cost accounts for around 1.8% of its revenue, while Bharti Airtel’s is approximately 2.3%. Even Vodafone Idea, amidst financial struggles, maintains an employee cost of 4% of its revenue, officials revealed.

BSNL, currently employing around 59,000 individuals, has seen a reduction in its employee cost since the implementation of the voluntary retirement scheme in 2019. However, it still remains elevated compared to its private counterparts, affecting the company’s profitability.

Lagging Behind: BSNL, which has yet to commence 4G services, is experiencing subscriber losses to competitors like Jio and Airtel, both of which have made significant progress in their 5G deployments.

In FY23, BSNL reported a loss before exceptional items of ₹6,662 crore, although narrower than the previous fiscal year. While it achieved operational profit and revenue growth, its user base declined from the previous year.

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