Strategic Joint Venture between BSNL and Telecom Giants for India’s Smart City Infrastructures

Introduction

Bharat Sanchar Nigam Limited, commonly referred to as BSNL, is one of the largest broadband providers in India with more than half of the total market share. It is among the oldest fixed telephony providers in the subcontinent and traces its roots back to the colonial era. However, its long standing reputation as a world-class broadband provider has come under threat after the Kotak Institutional Equities (KIE) revealed that it was among some of the biggest losers in the market (Gopal Ji; Suman Bakhri & Anisha Bhakri, n.d., p. 56). The company’s situation was so critical that the federal government of India even considered an equity infusion as the only viable option to avoid a complete shutdown. Many of BSNL’s woes stem from the fact that it was a private entity having to deal with a host of challenges in the Indian market. Select preferential low spectrum allocation failed to solve any of the company’s woes, portending darker days ahead. An initial move by their clients from landlines to the more modern mobile phones meant that the company dramatically lost its fortunes during the turn of the 21st century.

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Moreover, the subsidies promised by the government were also not forthcoming, even though the BSNL continued with its rural landline network projects. To add to this, the Indian government also mandated the mandatory purchase of 3G spectrum which saw BSNL purchase a pan-Indian broadband wireless network at great costs. As a result, the company’s operative capacity soon faltered, leaving it with a low revenue reserve and a decline in subscriber numbers. Nevertheless, the reality is that India needs BSNL as a conduit that will ensure projects focusing on e-governance are implemented all across rural areas.  Possible synergies between BSNL and private Telecom Players such as Reliance Jio, Airtel and leading International players is, thus, a feasible for India’s Smart City Telecom Infrastructures. In addition to this, the Make in India initiative will be highlighted as a catalyst to such a synergy.

Strategic Analysis for Consideration

Relevance In an Evolving Connectivity Market

Before embarking on finalizing arrangements for a possible synergy with any leading telecom player, BSNL must first develop a clear policy on how to remain relevant in an evolving connectivity environment. India currently has to contend with an annual growth rate of 1.1% and a burgeoning population focused on remaining connected (Makkar & Kumar, 2011, p. 14). As a result, data usage will increase owing to a rise in the number of consumers in the connectivity market. One alternative to this state of affairs is the inception of free Wi-Fi hotspots in restaurants and shopping centers that are sponsored by BSNL. These hotspots will essentially serve as an extension of BSNL’s cellular network and connect the population to a reliable source of internet.  In addition to this, people love public Wi-Fi. BSNL can, thus, use the knowledge of this fact to lower its connectivity costs and attract potential subscribers to its service.

A merger with a leading provider such as Airtel would mean that Wi-Fi hotspots would now be viewed as data plans that function as a way of providing seamless connection to users. Functioning as an extension of the services provided would mean that many would be willing to pay in future due to the host of benefits that it presents to the user. Traffic will also be unburdened from cellular to Wi-Fi which would lead to significant savings while still delivering the same quality of experience. India’s Smart City Telecom Infrastructure will also benefit from this since its success will be directly dependent upon fast and easy connectivity. The synergy created will also serve the greater Swadeshi Make India initiative by providing a homegrown solution to serve a modern population through a robust telecom backbone. It is also critical to acknowledge that telecom providers serve critical multi-fold roles in a smart city since they lay the foundation for the creation of infrastructure to respond to growing needs.

Ensuring that a Connection is Maintained between Operator and Subscriber

When creating a synergy between a BSNL and any other telecom giant, the company also has to consider its subscribers during each phase.  Since BSNL is in the business of providing connectivity services to its users, the company has to ensure that they maintain high performance standards. Typically, this will involve drastic improvements on the quality of cellular and data connection, especially since the company will have undergone a transformation in its image and activities. The new entity has to make sure that it continually reassures its customers of the improved quality of services that they should expect from the company. A reliable support service will serve this purpose best by providing accurate and timely answers to any queries posed by subscribers. Moreover, the company will also have to update their support staff on relevant updates regarding the company’s progress in the industry and additional perks that subscribers will enjoy.  It has been proven, time and again, that subscribers are particularly drawn to new services that were previously unavailable in the prior dispensation.

 A joint venture alliance presents an opportune moment for BSNL to introduce new customer-friendly packages designed as to benefit them in the long haul.  Part of this initiative also includes maintaining a steady connection with subscribers through novel developments such as social media.  Platforms such as Twitter, Instagram and Facebook can easily forge a connection between the subscribers and operators (“CORPORATE BRANDING AND CONSUMER LOYALTY IN THE TELECOMMUNICATION INDUSTRY: A CASE STUDY OF BHARAT SANCHAR NIGAM LIMITED (BSNL) INDIA,” 2015). It is also here that BSNL can collect critical information that will be at the core of India’s Smart City Telecom Infrastructure. Rigorous data analytics conducted by the joint venture will provide a detailed and complete assessment of the subscribers, their habits and preference. Such information is crucial during the planning process since the services provided are made in correspondence with their immediate needs. The Make India initiative will also receive a boost through this initiative by using this information to serve the population in an easier fashion. For instance, telecom customers can even prove their eligibility to receive loans since telecom companies have this information in their possession and have an unadulterated view of their subscribers.

An Opportunity to Increase the Average Revenue Per User (ARPU)

One of the hallmarks of a merger between a BSNL and another private entity is that this joint venture accords the new entity with a unique opportunity to increase their revenue stream. Owing to the company’s focus on providing high quality services and products, the new entity is now at a better position to increase their average revenue per user. Improvements in consumer communications and networking usually come at a high cost to the mobile network operator but will benefit them in the long run (Nand, 2014). Subscribers often accept these prices willingly since they too are aware of the fact BSNL’s joint venture and its new packages are specifically geared towards improving their experience. Furthermore, this new alliance will inadvertently lead to an increase in traffic in their cellular platforms. India’s Smart City Telecom Infrastructure will be driven, partly, by this increase in connectivity and traffic which will ultimately promote the initiative.  An increase In ARP will also benefit BSNL directly in helping it recover from any losses made previously and respond effectively to any emerging threat. Besides, the Make India initiative will also become aware of a new scope and area of interest where potential digital investments can be made for posterity.

Making Huge Capital Investments for Network Infrastructure

An alliance with the aim of forging a joint venture is a taxing endeavor that should take precedence over other company activities. In particular, BSNL will have to ensure that it has paved the road for a smooth transition by building a cohesive joint network that will serve specific operational goals.  A sophisticated network also implies that a venture will also possibly encounter a myriad of risks (Sridhar, 2011, p. 86). The rapid changes that were experienced during the network creation phase pose an existential threat, hence the need for constant monitoring. An alliance between BSNL and Airtel India will be a partnership of convenience that will make sure that the two join forces to build an elaborate network in a rapidly transformative telecom market. The investment will also reduce the costs associated with running such an entity while simultaneously improving the company’s efficacy using economy of scale. India’s Smart City Telecom Infrastructure will also benefit from these investments since major cities will now become telecom hubs that are in line with its vision. Moreover, this alliance will also allow BSNL to restore its lost glory by being confident enough to diversify and enter new markets. Revenue generation will now become the norm for this new entity, in addition to strengthening its marketing capabilities.

Conclusion

Bharat Sanchar Nigam Limited is still ranked as the longest serving broadband providers in India, although it has recently been gripped by a series of damaging losses. Forging an alliance with a private telecom giant such as Reliance Jio, Airtel and other leading International players will create a new entity to offset these losses. Thus, the company has to consider its relevance in the connectivity market, operator-subscriber connection, increase in average revenue per user (ARPU) and huge capital investments that will serve India’s Smart City Telecom Infrastructure dream.

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