BSNL redraws performance goals as regional units bleed cash

The profit reported by BSNL in the December quarter of last financial year — its first in 17 years — followed accounting changes, including a revised depreciation method and moving some employee costs to assets as capital work in progress, which significantly lowered reported expenses. The benefit of those adjustments carried into the following quarter as well, but has since faded, with the company returning to losses.

BSNL’s financial statements dated 12 February showed that its loss in the December quarter narrowed marginally from ₹1,358 crore in the July-September period. Higher depreciation and amortisation expenses, network operating expenses and employee bills, continue to weigh on the telecom operator’s bottomline, the statements show.

For the nine-months ended December, the company’s loss was at ₹3,709 crore compared to ₹2,521 crore in the year-ago period.

An internal review in January revealed a profitability gap : more than one-third or 67 of the public sector unit’s 174 operating regions across circles were making operating losses, dragging down its overall earnings, according to people aware of the development and documents seen by Mint.

BSNL, which now wants to ensure that it remains cash positive at the operational level, has told all its circle heads that their performance will now be judged by how much cash their circles actually generate, as the traditional Ebitda (earnings before interest, taxes, depreciation, and amortization) metric includes non-cash accounting entries, a government official said asking to stay anonymous.

Mint‘s queries emailed to BSNL last week remained unanswered.

Poor performing regions

The 67 regions generated a negative Ebitda of about ₹608 crore in the nine months to end-December. In comparison, the remaining units booked Ebitda of about ₹2,435 crore, resulting in net Ebitda of ₹1,827 crore.

“Analysis indicates that BSNL’s Ebitda would have surpassed ₹2,435 crore had it not been for the drag from underperforming units,” the telecom operator said in a letter dated 4 February to the chief general managers of all the circles.

The Ebitda-negative regions are in West Bengal, Gujarat, Uttar Pradesh (East and West), Telangana, Maharashtra, Madhya Pradesh, and Bihar.

Circle heads have been asked to take action to ensure that all these Ebitda-negative units become Ebitda-positive by the end of the March quarter.

“…the circle heads have been asked to identify specific root causes for their financial underperformance and implement measures to improve revenue and reduce operational costs,” the official cited above said.

In the December quarter, BSNL’s revenue from operations grew 7.1% year-on-year (YoY) and 3.1% quarter-on-quarter (QoQ) to ₹5,325 crore. The higher revenue can be attributed to consumer mobility business growth as the telecom operator expanded its 4G network and added subscribers.

The operator added 483,962 mobile subscribers, taking its base to 92.7 million at the end of December, shows data from the Telecom Regulatory Authority of India (Trai). In comparison, Reliance Jio had 489 million subscribers, while Bharti Airtel and Vodafone Idea had 369 million and 193 million, respectively, according to Trai data and disclosures by the companies.

The consumer mobility business contributes 45% or ₹2,411 to BSNL’s topline.

Adjusted Ebitda

On benchmarking performance to ‘adjusted Ebitda’ from now on, the official added that the direction is to eventually meet operational liabilities independently, without any support from the government.

BSNL is dependent on the government on several counts: it effectively doesn’t pay any fee for spectrum use or transfer a share of revenue like other telecom operators do—and gets capital expenditure support from the Centre via its parent ministry, the department of telecommunications (DoT).

Its Ebitda includes accounting entries such as government capital grants, write-backs of excess provisions, and adjustments linked to lease liabilities. While these entries improve reported profitability on paper, they do not always translate into real cash available to the company.

To get a clearer picture of operating performance and liquidity, BSNL will now track ‘adjusted Ebitda’, which excludes non-cash or accounting-led gains but factors in lease payments—the actual cash outgo the company incurs for leased assets such as towers, buildings, or equipment. This adjusted metric will better reflect which regions and circles are truly generating cash and contributing to the company’s financial sustainability.

The company’s adjusted Ebitda would be about ₹500 crore in the nine months ended December, according to the official cited above.

In September last year, communications minister Jyotiraditya Scindia had talked about the impact of higher depreciation on the company’s bottomline going forward. “We may not be able to see that run rate of profitability going forward, as the company did a capex of ₹25,000 crore in FY25,” Scindia had said, adding that the analysts should look at BSNL’s operating profit and Ebitda rather than net profit going forward.

In October, the minister also called for cost discipline in the company and told its chief general managers that no circle should report a negative Ebitda.

Push for self-sustenance

An expert suggested the creation of an infrastructure investment trust or InvIt that will house BSNL’s assets. “To make BSNL efficient and free from financial support largely, the government can unlock the potential of its network assets and physical infrastructure” through an InvIT, said Satya N. Gupta, former principal advisor at Trai.

Gupta said an InvIT structure will not only make BSNL self-sustaining but also accountable to the public and investors. An InvIT is a financial structure that allows infrastructure assets to be placed into a trust and monetized by raising money from investors. The model is typically used to unlock value from stable, income-producing infrastructure assets.

DoT has given BSNL a revenue target of ₹28,476 crore in 2025-26, a 37% increase from the previous year. For the nine months ended December, the company’s revenue rose 9.2% to ₹15,521 crore.