Chairman and managing director of India’s largest state-owned telecom company, Bharat Sanchar Nigam Ltd (BSNL), Kuldeep Goyal talks to Ishita Russell about the recent controversies surrounding the company and the company’s future plans:

Q: BSNL has been given a headstart for 3G services when compared with its private counterparts. How do you plan to capitalise on this opportunity?
A: We are planning to launch 3G services by the end of next month. We are going in for a large-scale launch, mostly in the northern and eastern parts of the country. We also want to cover important towns in the South, including cities like Chennai. We want to provide a number of premium services through the 3G mode, like video-calling, video games and movie downloads, besides high-speed internet connectivity.

Q: Do you think cost would be a main differentiator between the state-owned and private operators offering 3G services?
A: Cost in this case may not be that much of a differentiating factor because the services initially will be used by the higher strata of the society.

Q: The government has been raising concerns about the dwindling revenues of BSNL. Do you think 3G services will provide the company a huge boost in its revenues?
A: 3G will of course bring in additional revenue. The capital expenditure which is involved initially may not be equitable initially, but once the customer base builds up, we hope that this will be a really profitable business for us.

This (cost of 3G infrastructure) is an incremental cost. I can’t give the exact figures, but it is substantial. Orders have already been placed for the equipment. We should have our pan-India rollout by mid-2009.

Q: With the entry of new private operators in the telecom space, how do you see this market now?
A: With various new operators and new competition, BSNL is trying to improve the quality of service. We are trying to improve our network quality so that consumers not only find our services affordable but also of good quality, and that is how we would like to differentiate ourselves with the rest of the operators.

Q: BSNL’s market share, compared with the private operators, has been depleting every quarter. What are the reasons for this and how do you plan to improve the situation?
A: Our market share was affected due to capacity constraints earlier. But now a capacity of about 37 million lines has been created, along with commissioning of a large number of BTS or towers. We hope that with this we will have a significant increase in the number of customers.

Q: What is the status on the 96 million line tender that you had issued earlier this year?
A: That is under our evaluation. It will take some time. It is a very complex tender: there are four zones. In each zone, very intricate evaluation is required. Technical evaluation is still going on

Q: BSNL has been dragged into the centre of a controversy with its recent intra-circle roaming agreement with Swan Telecom, which has not even begun rolling out its services. Your response to that?
A: With Swan Telecom, we only have a memorandum of understanding. There is an understanding that if there is an extra capacity with us, we may allow them to have intra-circle roaming and in addition they may have arrangements with us to share their infrastructure. It is only an understanding as of now, no agreement is there. Nothing has been given to them, nor any payments have been received. As and when the capacity becomes available, we may try this out, and if this experiment becomes successful, we may try this out with others also.

Q: With a host of incumbent operators in the market, why was Swan Telecom chosen?
A: Intra-circle roaming was permitted by the government only recently. After the government permitted it, someone had to be the first one (to have such arrangement).

Q: It is also alleged that BSNL’s agreements with Soma Networks were unfair as they did not go through the required bidding process in Gujarat, Maharashtra and Andhra Pradesh?
A: Soma Networks approached us quite some time back when there were no other offers like that. We conducted trials and we found that the services that were offered were quite satisfactory. They were appreciated by the government of Gujarat. Therefore, we had an understanding to take the first-mover advantage and start with Soma Networks. Now we have come out with request for proposals (RFPs) for other circles. So this thing came when no other offers were there. Soma Networks had brought in a new technology and therefore we entered an agreement with them.

Q: Soma Networks has deployed FDD technology in the three states which is obsolete when compared to the TDD mode of spectrum that the private operators want to deploy. Besides, it is not possible for both technologies to co-exist.
A: When they brought that equipment it was in the FDD mode. But now the government has allotted spectrum only in TDD mode. Therefore, we too have started deploying the TDD mode. These three states had allotted spectrum in the FDD mode, the way trials were carried out. We have requested them (Soma Networks) to switch to latest technologies later.

Q: Don’t you think that is will stifle the competition?
A: I would not like to get into that controversy, but if there is such a thing then in any case we are requesting them to come out with the TDD mode equipment also.

Q: Can you elaborate on you plans for WiMax in the country?
A: We have already ordered 1,000 BTS for rural blocks from Huawei and Gemini. Bids were opened recently for another tender for Kerala and Punjab. For the remaining states, we have issued an RFP under the franchisee model.

Q: BSNL had planned to hive off its infrastructure arm into a separate company. What is the progress on that?
A: We have engaged Boston Consultancy for studying this. We hope to receive their report early next financial year.

Q: What is the status on the much talked about listing of BSNL?
A: BSNL Board has passed a resolution and has recommended the government to have an initial public offer (IPO) to list the company by issuing 10 per cent of its shares. Once the government takes a decision, we will again have a dialogue with the employees and make them understand the advantages of listing. Now, because of the downturn in the economy, this is probably not the right time (for the IPO).

Q: There were also talks about BSNL’s merger with ITI and then MTNL. Is there any progress on that?
A: As far as the proposal to merge ITI with BSNL is considered, it was felt that this request could be looked into only after the listing of the company. At the moment this is not feasible. Even merger with MTNL can only be considered once BSNL gets listed. So a lot of things depend on the BSNL listing. Listing is what the company requires.

Q: What kind of a road map do you have in mind for BSNL for 2009?
A: We want to expand our mobile and broadband services, and launch new services like 3G and other value-added services. Right now, we have about 75 million customers. We hope to add more than 20 million customers next year.

Source:business-standard