Bharat Sanchar Nigam Limited (BSNL) reported a profit of Rs 2.62 billion in the third quarter of financial year 2025, marking its first return to profitability since 2007. The PSU is also charging ahead with its long-delayed 4G roll-out and aggressively marketing its fibre-to-the-home (FTTH) and leased lines offerings. It has clawed back some subscriber market share by announcing several schemes that offer better value-for-money and more features for the average mobile user.
The chairman and managing director of BSNL has said, “With these efforts, we expect revenue growth to improve further, exceeding 20 per cent by the end of the financial year. Revenue from mobility, FTTH and leased lines has increased by 15 per cent, 18 per cent and 14 per cent respectively over the third quarter of the previous year. Additionally, BSNL has successfully reduced its finance cost and overall expenditure, leading to a decline in losses by over Rs 18 billion compared to last year.”
Do all these positive developments indicate a sustainable turnaround for the telecom service provider? Well, the answer is more nuanced than the results or the management statement suggest.
The auditor’s notes to the results highlight significant changes in accounting procedures that helped deflate expenses, which dropped by Rs 12.15 billion from the third quarter of financial year 2024. For example, BSNL reported a Rs 3.37 billion reduction in employee expenses, but this was due to moving a large component of expenses off the profit and loss account and reporting them as assets on the balance sheet instead.
It also changed its norms for amortisation (the practice of spreading out the cost of assets over their useful life). The auditor noted, “We draw attention to note no. 4 (iv) regarding change in method of amortisation of spectrum fee, which reduced the company’s loss for the nine months ending December 31, 2024 by Rs 7.82 billion.”
In another note, the auditor stated, “Other income includes Rs 2.85 billion, being excess provision written back during the nine months ending December 31, 2024.” Write-backs are a practice where funds set aside for potential costs are added back to income if those costs do not arise. The adjustment pushed “other income” to Rs 7.06 billion in the third quarter, up 37 per cent from the third quarter of financial year 2024.
The auditor also noted, “The obligation of the company for employee retirement benefits is short-funded by Rs 41.36 billion towards gratuity and by Rs 1.22 billion towards leave encashment.” This indicates that BSNL would have recorded losses in the third quarter of financial year 2025 if it had not changed its accounting practices. Even if we accept the Rs 2.62 billion profit at face-value, BSNL’s net loss for the first nine months of 2024-25 stands at over Rs 45 billion.
Since 2019, the centre has approved three revival packages for BSNL and MTNL, aggregating over Rs 3 trillion. Around Rs 700 billion of this is still to be utilised. Apart from facing stiff competition and suffering accumulated losses, BSNL has many other issues to tackle, such as over-staffing and an intractable union.
However, it must be admitted that the operational performance seems to have improved, and the new aggressive attitude is surely a positive. Moreover, BSNL remains the key agency in delivering rural connectivity, including BharatNet. If it successfully enhances rural connectivity, it will facilitate significant growth in commerce and digitisation across the hinterland.
Ideally, of course, BSNL will turn itself around. But even if it continues to sustain losses, the benefits from its activities – including new tax revenues for the government and easier delivery of government services – could well outweigh the losses suffered by the PSU.
