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
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