This year, BSNL will invest Rs 14,076 crore towards that objective. Last year it did Rs 16,571 crore. And between the current financial year and 2006-07, it will invest a total of Rs 66,500 crore. Phew!

The company's new Chairman and Managing Director Prithipal Singh, an Indian Telecom Service lifer who considers his present post the pinnacle of his achievements, may look avuncular, and speak ever so softly, but the substance of BSNL's ambitions are such that they should send a cold shiver down the spines of its competitors.

By 2005, BSNL's cellular service (based on the popular Groupe Speciale Mobile technology) will cover 1,021 cities and reach out to 15 million subscribers, half the estimated GSM market according to the company and just around a third according to BT's own calculations.

This year, its target for connections is 2.4 million GSM, a million CDMA (Code Division Multiple Access, a rival mobile technology, and its Wireless-in-Local-Loop platform is being used by basic telephony companies to provide `limited' mobile services), and 3 million fixed lines.

The plans don't end there. BSNL has applied for an international long distance (ILD) licence; it proposes to become a broadband service provider; and it is even contemplating internet dhabas (cafes are for the anglicised).

Government companies aren't known for their aggressiveness-certainly not companies still trying to live down their past as government departments. It's almost as if, magically, in the two-kilometre journey that separates BSNL's new office at New Delhi's central business district Connaught Place from its old one at Sanchar Bhawan in the heart of Lutyen's Delhi, the company has acquired some gumption.

It isn't just ambition that lies behind BSNL's plans. It is the desire to survive. Not too long ago, artificially high domestic long distance tariffs (Rs 24 a minute for distances over 1,000 kilometres) used to subsidise relatively low local call charges of Rs 1.20 (for a three-minute call). Competition changed that: IndiaOne, the first private company to enter what had until then remained BSNL's fief, slashed rates by 50 per cent in the Rs 8,000 crore-a-year market; BSNL had to cut rates even further to Rs 9.50 to stay relevant.

The company has weathered competition largely by not providing its 34 million subscribers access to IndiaOne's service-citing a lack of agreement on revenue-sharing for interconnection and technical difficulties in providing the Carrierr Access Code-but that will change once the telecom regulator gets its act together. That, and the imminent entry of Reliance and VSNL into the fray will erode BSNL's marketshare.

If competitors aren't exactly shaking in their shoes-they should be-it is because BSNL's plans have remained just that, plans, for some time. It acquired its GSM licence, for instance, in 1999. The licence has, however, not yet been operationalised even as private cellular operators have spread their tentacles to 1,400 cities. Says AT&T India Managing Director Virat Bhatia: "They need to chase value in cellular, unlock the commercial potential for providing access and find ways to retain maximum revenue in the immediate time-frame."

What Ails BSNL?

It can't be the money. With revenues of Rs 23,500 crore and net profits touching Rs 5,000 crore, the company isn't your everyday cash-strapped telco (See Where's The Money?). And it has survived the reduction in domestic long distance tariffs that everyone expected to hurt. "DLD traffic has risen 30-35 per cent after the cuts and we have managed to bridge the (revenue) gap," says Singh. "They must have regained their revenues," adds Ajay Pandey, COO, Tata Teleservices. "They didn't need to invest in additional capacity to accommodate rising demand."

It can't be the infrastructure. BSNL has 35,000 telephone exchanges, each one of them digital, 328,000 kilometres of optic fibre cable (OFC; another 100,000 kilometres is to be lit this year), and 1,065,000 public telephone booths.

The money and the infrastructure will both come in handy. In cellular telephony, for instance, the company is up against some entrenched rivals, such as Bharti, Hutch, and BPL-Idea. Then, there are the two competitors it will encounter at every stage of its integrated telecom play, Bharti and Reliance.

It won't be easy for BSNL to play the price card. Several of its competitors have been in business for a while and may have recovered some of their fixed costs. And cellular tariffs are probably as low as can get without seriously affecting a company's bottomline. Singh's strategy? To leverage existing infrastructure to lower the cost of rolling out the network and hope quality of service will do the rest. "We will grab most of the growth (in the cellular market)," says Singh. "People are not very satisfied with private mobile operators and are waiting for our service."

A government company mouthing the s-word; doesn't Singh realise what people think of BSNL's service quality? He does. Only his reference isn't to the way BSNL's front-line staff deal with customers; it's got to do with the quality of service. The erstwhile monopoly's network will provide the widest coverage-and that's one area where even the best private companies could do with some improvement. "Its biggest strengths are experience and size of the network. None of us can replicate that in a short period. BSNL's network is so huge that it can go all out to offer whatever products and services it wants to,'' says Pandey. Then, as a sting in the tail, ''If only they could bring in a bit of innovation and customer orientation, they could give us all a tough fight."

Volumes, though, won't translate into profits. Most non-metro mobile operations-BSNL has 18- aren't money-spinners and the company doesn't have a presence in the two largest fixed service and cellular markets, Delhi and Mumbai. Shedding some of its PSU-baggage would help. One analyst believes an evaluation of customers would help too. "Right now, BSNL doesn't differentiate between high-value customers and low-value ones."

The company isn't averse to meeting corporate needs, but its Director (Commercial & Marketing), B.R. Khurana is scandalised by the suggestion that maybe it is time BSNL created a hierarchy of customers. "We don't distinguish between customers on the basis of the amount billed; we don't work for business alone." Oops.

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