7/28/2019 Sam Pitroda Committee Recommendations on BSNL.pdf

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SamPitroda committee recommendations

BSNL is the seventh largest telecommunications company in the world providing acomprehensiverangeoftelecomservicesinIndiawithanequitycapitalofRs12000/ crores,net assets worth Rs 88,000/ crores and a turnover of Rs 35000/ crores. Further, thecompany caters to 90million customers, has 300,000 employees, 750,000 kmsofopticalfiber

,a

network

of

40,000

towers,

extensive

urban

(except

Mumbai

and

Delhi)

and

unparalleled rural coverage and many more unique assets and capabilities that offersignificantpotentialforgrowth,revenuegeneration,valueunlockingandsocialrelevance.

Thiswhollyownedgovernmententerprise isunderseverepressureand ismakinglosses for the first time due to increased competition, a declining fixed line market,antiquated processes and procedural bottlenecks especially related to purchase ofequipment, bureaucratic and government dependent decision making system, lack ofcollaborative actions, largework force, regulatory changes, operational inefficiencies andotherinternalandexternalchallenges.

Atameetingchaired by thePrimeMinister to review the functioningofBSNL inJanuary 2010, it was agreed to set up a committee to examine the issues and submitrecommendationswithinatimeperiodofonemonth. TheCommitteehadthreemeetingsand a series of major discussions with BSNL executives, Department of Telecom (DOT)leadingconsultants,investmentbankers,privatesectorrepresentatives,presentandformeremployees of the company and others. During its consultations, the committee alsoreviewedhundredsofemails, individuallyandcollectively. Basedonthesediscussions,thecommitteestronglybelievesatthat it ispossibletobringaboutaturnaround atBSNLandonceagainposition it isthedominantplayer intelecom byprofit ,revenue,marketshare,technology,servicesandsocialrelevance. However,thiswillrequirevision,commitmentandsupportfromthegovernmenttoimplementboldinitiativesandharddecisions.

Therecommendations

of

the

committee

need

to

be

viewed

against

the

backdrop

of

themarketover the last fiveyearswherethe IndianTelecom Industryhasgonethroughaperiodofintensetransformationoccurringthemultipledimensions

Mobiletelephonyhasleapfroggedfixedlinetelephonywithover550millionmobileSimconnectionsandincreasingcomparedto35millionlandlinesanddecreasing.

TelecomhastransitionedfromatechnologydrivenbusinesstocustomerCentricbusinessrequiringanorganizational DNAofcustomercare.

Theindustry hasgonefrombeingamonopolytohypercompetitionwithovertenOperators.

Competitionisreducingprices,improving technology andintroducingnewbusinessModels.

Telecom is now becoming pervasive in India with far reaching implications inGovernance,agriculture,education,health,defense,business,energy,infrastructure,finance,productivityefficiency,competitiveness,publicservicesetc.,

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7/28/2019 Sam Pitroda Committee Recommendations on BSNL.pdf

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TheCommitteeRECOMMENDSTHEFOLLOWINGTOIMPROVEOVERALLPERFORMANCEOF

BSNL

1.0 Enhance the quality of senior executives, themanagement team and the

decisionmaking

process

to

respond

to

the

competitive

business

environment

andthechangingmarketrealities.

1.1. Focusonselectionofthebestprofessionalsfromthemarket,atmarketratesforhigherlevelmanagement,withrelevantexperienceanddomainexpertise(estimated around 3050). Internal candidates should be given equalopportunity,withoutanypolicyofpreferentialtreatment.

1.2. Appointaneminentpersonfromtheprivatesectorwithstrategicvisionandthestature to interfacewiththe externalenvironment,asthechairmantofocusonshareholdervalue. SeparatethepostoftheManagingDirector/CEO(FromCMD),whoshouldbeapersonwithrelevantdomainexpertise,with

fullP/L

responsibilities

and

autonomy

to

manage

day

to

day

operations.

This

mustbedoneimmediately. Also,forefficientdecisionmaking,empowertheMD/CEOwiththeabilitytoactasfastasthecompetition.

1.3. Changetheboardcompositiontosevendirectors,oneinternaldirector(MD/CEO), twogovernmentnomineeNonExecutiveDirectorswith relevant skillset,threeexternalindependentdirectorsofeminenceandrelevanceandthenon executive chairman. CFO and COO shall be prominent invitee to theBoard.

1.4. AllowtheMinistrytointeractonlythroughboardrepresentationandregularboardmeetingsandnotthroughdaytodaydecisionmaking interfacingandsupervision.

1.5. AppointafulltimeChiefTechnologyOfficer(CTO),aChiefITOfficer(CIO),aChief Operating Officer (COO), and a Chief Financial Officer (CFO), all ofwhomshouldreportdirectlytotheCEO.

1.6. Appointanadvisoryboard foreachof thebusinessunits. TheseshouldbeappointedonlybytheBoard.

1.7. Provide three year contractswith specific targets for all keymanagementteammembers(estimatedaround3050)withrestrictedstockoptionsand/orrelatedincentivestodeliverincreasingprofitsandgrowth.

2.0 Complete the organization restructuring process currently underway to establishfour independent business units for Fixed access, Mobility, Enterprise and Newbusinesseswithdueclarityandcoordinationtoavoidduplicationofeffortsand forefficientuseof resources related tonetwork,human resource,other facilities andservices. Empower independent business unit heads to act as fast as thecompetition.

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3.0. Improveorganizationperformanceandemployeeproductivitysubstantially.

3.1. CompleteITSabsorptionprocessimmediately.

3.2. Induct significant young talent in technology, IT, Marketing, CustomerServices,Salesetc.,

3.3. Retireortransferaround100KemployeesthroughbestpossibleprocesseslikeVRS.

3.4. Instituteaperformancedrivenculturetocreateameritocraticorganization.

4.0. Changeprocurementprocessesandprocedures substantially to respond to rapidlychangingtechnologyandindustryneedswithnecessarytransparencytimelinessandaccountability using tools such as EProcurement, vendor rating, rate running

contracts,schedules

etc.,

to

reduce

reasonable

delays

and

to

avoid

legal

conflicts.

However,togaincostadvantageandobviatetechnologyrisks,BSNLshouldfocusonminimizingthecapitalexpenditurebyproactivelyseekingandadoptingservicelegalagreement(SLA)boundsharedsolutions,foractiveandpassiveinfrastructureneeds.Simultaneously,toremaincompetitiveincostandqualitydeliveryBSNLshouldadoptamanaged servicemodel formany of its operations e.g., Operations relating tonetwork, IT, Call Centers etc. To ensure this carry out special consultations on apriority basiswith the Chief Vigilance Commissioner, keeping inmind the specialcircumstancesofahighlycompetitiveTelecomSectorGovernmentCompany.

5.0. Enhance business operations by building special expertise in marketing, sales,

distribution,

customer

service,

billing,

revenue

assurance,

quality

assurance,

service

provisioning, network management, network planning, fault management etc.Simultaneously, manage cost aggressively. Take urgently, special initiatives toenhance the quality of service by empowering employee at all levels to focus oncustomer orientation and customer satisfaction. Improvement in customersatisfactionindextobepartoftheannualplanandperformancematrix.

6.0. Disinvest30%instagesattheappropriatetime,sayafterfundamentalchangeshavebeenmade to enhance enterprise value, through Indian strategic investor and atInitial Public Officering (IPO) to return 10% to the Government and use 20% gotemployeeVRS,expansionandoperation. Furtherdisinvestmentcouldbeconsideredafteradetailedperformancereviewinthreeyearstime.

7.0.Explore new markets and applications related to Enterprise, Government, Defense,Education,Health,Agriculture,Energy,Judiciary,Newgreenfieldcities,Transportation,Security,Safety,Police,DisasterManagement,Fibertohome(FTTH) etc. Createviablebusinessmodels in these areasby collaboratingwith relevant expertorganizations tomakejointofferings.

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8.0. Provide30millionnewhighspeedbroadbandconnections inthenext3yearswithrelevant and useful applications and content in local languages and significantlyimprovequalityofserviceandconsiderofferingservicelevelguaranteetowintrust.

9.0. Invest inbuildinga financially remunerativenextgenerationend toendnational IPNetworkofthefuturetohandleeverincreasinginternetanddatatraffic.

10.0 Unbundlelocalloopforpublicandprivatecompaniestolaunchnewservicesonnonexecutivebasiswithcaretopreventcannibalization.

11.0. Exploit BSNLs unique positioning of infra led biggest food print in rural India bycreatingadditionalrevenuestreamsforruralinfrastructureandcapabilities.

11.1. Proactively offer sharing of active and passive infrastructure to otheroperators togenerateattractive returnsandensurenon cannibalizationof

BSNLcustomers

by

seeking

compliance

with

appropriate

conditions.

Shared

servicesmay include intracircleroaming,rentingofcapacitiesonactiveandpassiveinfrastructureetc.

11.2. Enhance and expedite rural communication facilities, services andapplications by connecting 2,50,000 panchayats and integrating variousgovernment flagship programmes targeted at rural development throughNREGA,RuralHealthMission, FoodDistribution, PDS, etc. to augment theinclusivegrowthagendaoftheGovernment.

12.0. Implement immediatelyendtoend ITsystemsandsolutions(ERP,CRMetc.)forall

key

business

processes

in

all

business

units

with

a

focus

on

Finance,

Billing,

Human

Resource, Customer Service, Network Management, Sales, Marketing, ProjectManagement,Trainingetc.

13.0. Createaseparatesubsidiarycompanyfortowerrelatedinfrastructuretoaggressivelymarket tootherpublic andprivate sector customers andunlockwhole/substantialpotential value through strategic stake sale, M&A or separate IPO. Explorepossibilitiesofmonetizingothersuchsubsystemse.g.,interconnectoperations.

14.0. Create a separate subsidiary toholdundeveloped landbank andother realestateassets (estimatedtobeover2.5Millionsquaremetersofvacant land insevenkeycities)andalargenumberofunutilizedstaffquarters,etc. Monetisethevalueofthissubsidiary

by

collaborating

with

a

reputed

and

experienced

real

estate

related

companyintransparentmanner.

15.0. EstablishaBSNLventurefundtoinvestand/oracquiresmallappropriatetechnologycompanieswithstrategicvaluestoencourage local innovation, localmanufacturingandnewbusinessopportunities.

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Please note that there are substantial details available on each of the aboverecommendationsforfurtherfollowup.

It is suggested that these recommendations be implemented urgently in amissionmodewith a dedicated team of three leading executives (MD/CEO, COO, CFO)with a detailedroadmap on each and every item specific time table, dedicated financial and humanresources and measurable milestones to return BSNL to profitability, growth and aleadershippositionintheglobaltelecommarket.

Thecommitteewouldbehappytoguidetheimplementationprocess.

SamPitroda DeepakParekh PJThomas

AdvisortothePrimeMinister ChairmanHDFCLtd., Secretary

InformationInfrastructure

and

Dept.

of

Telecommunications

Innovations andChairman,TelecomCommission