Recommending a Strategy

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Briefing to the PRESS/ MEDIA By INDIAN TELECOM
SERVICES ASSOCIATION November 21, 2005
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DoTs Absorption Process for Group A Officers
- A Major Goof-up Or A Grand Malafide Design??
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The Truth Unfolded !!!
November 21, 2005
ITSA
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18th Oct. - 17th Nov. 2005 Top middle level
managers of BSNL/MTNL thrown out without any
reason By Secretary, DoT creating mayhem
Ministry of Communications was least bothered
!!!
Did it serve Public Interest or Vested Interests?
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Repercussions
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Adverse Impact on Telecom Services

• Planning, Development Project Execution
  activities came to a halt impacting growth
  momentum
• Operations Planning Critical preventive network
  maintenance suffered
• Gradual deterioration in quality of various kinds
  of services set in
• Public Grievance Redressal mechanism Customer
  care nearly collapsed

Irretrievable Damage to BSNL MTNL
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Financial Loss to Government (Oct. Nov. 2005)
BSNL looses Rs 1,684 crore
MTNL looses Rs 440 crore
Total Loss Rs 2,124 crore
Who is responsible?
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BSNL Lost Business

• New Projects Delay Rs 1,564 crore
• Mobile Services Rs 100 crore
• Fixed Line Services Rs 10 crore
• Internet and Broadband Rs 10 crore
• Services
• TOTAL Revenue Loss Rs 1,684 crore

At least Rs 1,700 crore lost due to vacuum
created in Top Management/Technical Cadre
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BSNL New Projects Delay

• 60 million GSM Tender Rs 600 Crore
• Transmission Projects Rs 200 crore
• Broadband Multiplay Tender Rs 120 crore
• NT DTAX Tender Rs 120 crore
• IP-Tax tender Rs 22 crore
• CDR Billing CRM tender Rs 72 crore
• CDN tender Rs 30 crore
• Interest on unutilized Capex
• investment of Rs 26,000 crore Rs 400 crore
• TOTAL Revenue loss (Oct-Nov) Rs 1,564 crore

Work in corporate office of BSNL/ MTNL is
standstill
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BSNL Loss in GSM Business

• Capacity Expansion/Roll out in Existing Network
• East Zone (3 Mn) Rs 40 Crore
• (Commissioning due on 10th Oct, 2005, still
  pending)
• West Zone (3 Mn) Rs 40 Crore
• (Rollout was to commence in Oct 05 but now
  rescheduled to Dec 05)
• South Zone (4 Mn) Rs 20 Crore
• (commissioned in 17th August 05 by MoC,
  Negligible Rollout)
• TOTAL Revenue Loss Rs 100 Crore

Private Operators made the most of the festive
season But no Diwali Dhamaka package for BSNL
customers
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BSNL Internet and Broadband Services

• Broadband
• Slowdown in customer ramp up Drop of around
  1,500 customers per day Loss Rs 10 crore
• Premium/Corporate customers experiencing
  difficulties due to network outage
• Internet
• Corporate customers affected due to network
  outage, building backup redundancies
• Slow down in customers ramp up

Squeezed Download speed lines down
condition attracted extensive media attention
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MTNL Lost Business

• GSM 4 million GSM targeted for Oct 2005 shifted
  to Dec 2005.
• Broadband/CDN 2 Mn customers tender opening on
  18th Oct 2005, postponed indefinitely.
• CDMA 400K each for Delhi and Mumbai launch
  targeted by Oct 2005, indefinitely delayed.
• Virtual Calling Card (VCC) Cards not available.

Rs 440 crore revenue loss Has SEBI been
informed?
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Loss of Credibility

• Gradual deterioration in services and efficiency
  of Network Operations Maintenance has affected
  BSNL/MTNLs credibility among Corporate/Premium
  customers
• Leased Lines
• High Value Wireline Wireless Customers

Command structure broken creating utter chaos.
Dubious distinction-BSNL/MTNL corporate offices
locked for a month.
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Previous Performance of BSNL/MTNL Role of ITS
Officers
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Stupendous Past Performance of BSNL

• In the midst of the festive season BSNL
  announces FY 04-05 results
• Turnover up at Rs 36,000 crore
• Profit up by 70 from previous year to Rs 10,000
  crore
• Sharp increase in customers base
• Private Telcos consider BSNL as their only
  serious competitor

Will this growth sustain when future of 1,800
senior management people in BSNL is uncertain?
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ITS Officers Contribution

• ITS Officers are not cast in typical Babu mould.
  They are professional technocrats a fact
  acknowledged by industry reflected in their
  high valuation in Telecom market
• Timely Introduction of cutting edge technologies
  in BSNL/ MTNL due to excellent technical
  specifications drafted and adopted by the ITS
  Officers. - These specifications are industry
  benchmarks
• In-depth understanding of technology and market
  (by ITS Officers) have resulted in extremely
  lower procurement prices for equipment for BSNL
  and MTNL Another industry benchmark
• Excellent planning project execution skills of
  ITS Officers have made timely implementation of
  Mega projects feasible
• Given Private Operators a run for their money- eg
  CellOne
• All these have resulted in continuous reduction
  in telecom tariffs to end customer

Will this contribution continue in this
confusion?
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How BSNL has been transformed - 1

• By their sheer ability, grit determination,
  ITS officers have been able to achieve the
  following for BSNL
• The most trusted service brand in country
• The Fastest Growing GSM Telco in India- 1.25
  crore customer within 3 years (others did it in
  10 years). Poised to be No. 1 soon.
• Retain Market Leadership even in face of tough
  competition from Pvt. telcos
• Affordable Transparent Services - Remember the
  Rs 16/min airtime charges only three years ago,
  when MTNL/BSNL had not entered the market?
• Continued commitment to Rural Telecom Development
  in the country

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How BSNL has been transformed - 2

• BSNL has become the Largest Internet Service
  Provider in the country displacing VSNL- 20 lakh
  customers-Market share-26
• BSNL has the largest Telecom Network spread in
  every nook corner of the country Kashmir to
  Kanyakumari Remote terrains to High-Security
  zones
• Timely Induction of New Technologies to retain
  market competitiveness
• Introduce Broadband at very affordable prices
• Transition to NGN
• GPRS, Now 3G

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How MTNL became prized Telecom PSU?

• Most trusted Service Brand Largest Fixed
  Service Provider in Delhi Mumbai
• Fast Growing Mobile customer base despite late
  entry in Mobile Services
• Timely Induction of state of the art technologies
  to retain market competitiveness such as
  Broadband, GPRS, NGN, CDMA1xEV etc
• Most affordable tariff and transparent Billing

MTNL is the lifeline of Delhi / Mumbai due to
contribution by ITS Officers
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BSNL is the pride of IndiaMTNL also was till
recently
BSNL, MTNL and DoT progressed phenomenally
primarily because these were managed by
highly-skilled technocrats. It has been
recognised by Mr. Bimal Jalan , Ex-Governor RBI
in his latest book The Future of India
..There are also some organisations of the
Govt. (for example the DoS, the Telecom Deptt.,
the NHAI and Delhi Metro), which despite all
.handicaps have achieved excellent results
Page 109. When DoT, BSNL MTNL should ideally
and logically be headed by a Telecom
professional, is it not ironical that except
CMD BSNL, Secretary (T) CMD MTNL are from
Generalist/ Non-Telecom background??

Whereas BSNL is the worlds 7th largest
TELCO MTNL starts sliding!!
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Falling profitability of MTNL
Falling Income/ Profits and stagnant growth !!!
The Government needs to immediately remove CMD
MTNL if it is serious to prevent further erosion
of MTNLs market value shareholders wealth
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The Reward for Performance ?
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Diwali Reward (bonus) to the Officers

• Instead of Diwali bonus for the outstanding
  performance ITS Officers kicked out from BSNL/
  MTNL- their Offices locked overnight!!
• Officers were re-instated back on Nov 17 only
  after directives of the Court had reached
  contempt stage.
• MTNL implemented these orders even later as its
  non-telecom CMD took his own sweet time to honour
  court directives

What was the motive?
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Brief Chronology of Events - 1

• Nov 98 40,000 Group C D employees absorbed in
  MTNL with 40-50 pay hike. Other employees
  transferred on deemed deputation from DOT
• Oct 2000 BSNL created from DOT.
• 2002 3.5 lakh Group C D employees absorbed in
  BSNL.
• 2003 40,000 Group B Officers absorbed in BSNL
  MTNL with upgradation of pay-scales leading to
  40-60 pay hike. Even here 3,000 employees have
  not opted and continue to work on deputation
  basis in MTNL BSNL.

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Brief Chronology of Events - 2

• 24 March 2005 Absorption package suddenly thrust
  upon ITS Officers, without taking them into
  confidence with
• Decrease in salaries on absorption to the extent
  of upto 11 !!!
• Threat of being rendered surplus if not opted for
  PSU
• Bleak promotional avenues/ stagnation at higher
  levels
• The ITS Officers have en-masse rejected the
  absorption offer due to presently offered being
  inferior to existing service conditions in
  Government and prefer to work in BSNL/ MTNL on
  deputation basis.
• But DoT has its own theories for justifying
  absorption ignoring the reasonable service
  interests of Officers

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Myths on Absorption floated by DOT
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Moot Questions.

• Who is responsible for Rs 1700 crore loss to BSNL
  Rs 440 crore to MTNL because of inefficient,
  clumsy insensitive handling of Group A
  absorption process?
• The future of the company and 2200 professionals
  is at stake.
• Does this not warrant priority on part of the
  Minister, who has hardly spent any time for
  discussions with the ITS Officers?
• The Minister promised positive action and further
  dialogue in the last meeting held about 4 weeks
  back, with a committed time frame of 1week.
  Instead he has chosen to go on a foreign junket
  along with Secretary CMDs of MTNL/ BSNL. Does
  it not show inadequate indulgence of the Minister
  in the issue that warrants priority?
• Why were the concerns expressed by BSNL board on
  the issue totally ignored by the Secretary (T),
  who advises the Minister?

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Moot Questions.

• If the absorption issue is so important for the
  DoT, why was it sleeping over the issue for the
  last 5 years?
• Why was the Cabinet mis-informed on the issue by
  the DoT?
• Should the Minister/ Secretary unilaterally
  decide the fate of an organized cadre without
  consulting the representatives of the ITS
  Officers?
• Why were the officers withdrawn when they were
  willing to work on existing terms conditions,
  without any financial benefit creating a vacuum
  in Middle Top level Management/ Technical
  positions of MTNL BSNL despite warning that
  such actions shall adversely affect BSNL MTNL
  operationally financially?

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Moot Questions.

• Is it not a well-orchestrated conspiracy hatched
  by vested interests with ulterior motives to
  emasculate these large Telecom PSUs and depress
  their market valuation at a time when
  dis-investment is on the anvil?
• Is it a hidden agenda of certain interested
  quarters to benefit Private service Providers by
  stalling ambitious growth plans of BSNL MTNL
  and by undermining their ability to stay ahead in
  competition in the fiercely competitive Telecom
  scenario?

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About ITS Officers

• Numbering about 2200, these officers constitute
  the uppermost technical management hierarchy
  of BSNL/MTNL
• Like the IAS, the Indian Telecom Service (ITS)
  officers are recruited by the UPSC. They have a
  professional degree in Electronics/Telecom/
  Computer Engg. from IITs/NITs/RECs and have a
  mandate to develop Telecom infrastructure of the
  country. They are highly qualified, trained
  have rich and diverse experience in Telecom.
• They perform the core technical/management
  functions in BSNL/MTNL
• Business vision, Network Design Planning
  Preparation of Specifications for Telecom
  Equipment to be procured Testing for performance
• Maintenance of the state of the art Telecom
  equipment Adapting to the ever-changing
  technologies e.g. Analog to Digital, TDM to
  Packet, 2G-3G-4G etc.
• All top administrative and Human Resource
  functions
• As an acknowledgement of their proven abilities,
  these officers also much sought after by the
  Private Telcos and even TRAI TDSAT.

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Thank You