In a first-of-its-kind suggestion, the employee union of state-owned Bharat Sanchar Nigam Limited (BSNL) has requested the government of India to use Vodafone Idea’s 4G network to offer 4G services to BSNL’s subscribers.
“We request that the Government of India, by utilizing its status as the largest shareholder in Vi, may kindly ensure that BSNL is allowed to immediately provide 4G service to its customers by utilizing the 4G network of Vi,” wrote P Abhimanyu, general secretary of BSNL Employee Union in the letter to the Minister Ashwini Vaishnaw.
BSNL is facing a massive exodus of subscribers because it is yet to launch high-speed 4G services, while other private telcos launched 5G services way back in 2022. The service provider had a 10.30% market share at the end of November 2020, which had come down to 7.98% in November 2023, as per data released by the Telecom Regulatory Authority of India (TRAI).
This is proposed as a temporary measure until BSNL’s 4G network is up and running. However, the launch of BSNL’s 4G network has been delayed several times now, mainly because the government wants to use an indigenously developed 4G stack.
The government allotted INR890 billion ($10.72 bn) as well as 700 Mhz spectrum last year to BSNL as part of a revival package. It had also set aside INR529.37 bn ($6.37 bn) in this year’s budget to support BSNL in offering 4G and 5G services. The Minister had mentioned some time back that BSNL will launch both 4G and 5G services this year.
BSNL plans to set up 100,000 4G sites across the country. It has set up 200 sites in the state of Punjab and has conducted a few trials as well. The 4G network is being commissioned by Tata Consultancy Services (TCS), and as per the latest media reports, BSNL will be able to launch 4G services only by December 2024.
Unfortunately, Vodafone Idea itself is not in the best of health. The company is under massive debt and continues to lose market share because it is neither able to launch 5G services nor is it able to invest in expanding coverage or improving network performance.
4G as bridge to 5G
The suggestion to use Vodafone Idea’s 4G network is based on the fact that the government is the largest stakeholder in Vodafone Idea, India’s third-largest service provider, with a 33.1% stake. The government acquired the stake when Vodafone Idea opted to convert its Adjusted Gross Revenue (AGR) arrears into equity last year. Vodafone Plc and Aditya Birla Group together own a 50.4% stake in Vodafone Idea.
If BSNL is allowed to use Vodafone Idea’s 4G network, it will be able to quickly launch 4G services and, at the same time, focus on building a 5G network. This can be a win-win strategy for both BSNL and Vodafone Idea. Since BSNL owns 700 MHz spectrum, it can use that to deploy a 5G network, which can be used by Vodafone Idea to offer 5G services.
“The beauty of this solution lies in its simplicity: it avoids the complexity of tight network integration, enabling the provision of 4G and 5G services in a non-integrated, yet efficient manner…By focusing on their respective strengths and market needs, BSNL and VI can deliver enhanced connectivity without the hefty investment typically associated with network upgrades,” says Parag Kar, independent consultant and former VP – Government Affairs, India and South Asia, Qualcomm, in a blog post.
Such a solution can be a precursor to a merger between BSNL and Vodafone Idea, which can go a long way in ensuring their survival and possibly even revival. However, integrating a government-owned and a private limited company is not without challenges. Besides problems associated with cultural integration, bringing together two struggling service providers is hardly a recipe for success.