In July 2022 the government’s announcement of a package to revive the state-owned Bharat Sanchar Nigam Limited (BSNL) was accompanied by raised eyebrows, memes and jokes.
The question every one asked at that point why has the government opened the taxpayers’ revenue purse to aid a loss making public sector company, which by all measures, just did not have the smarts to stand alongside private sector giants where innovation, consumer centricity and value added services were the driving motif of business and growth.
Cut to 2025, BSNL reported a profit of Rs 280 crore for the fourth quarter ended March 31, 2025, marking its second consecutive quarterly profit. This is the first time in 18 years it reported back-to-back quarterly net profits.
Contrast this with a private sector global mega brand—Vodafone Idea—conveys a telling tale. Vodafone-Idea. The third largest telecom company has been saddled with losses with its balance sheet making for a very worrisome reading.
Union Telecom Minister Jyotiraditya Scindia’s unambiguous drawing of the line of 'thus far and no further’ so far as government support for Vodafone Idea is concerned should be seen in this context.
The minister’s clear message in an interview to the Times of India that the government will not bailout the telecom operator any further by converting dues into equity. The government already holds 49 per cent equity in the company, through the equity conversion route. The government has already converted dues worth Rs 36,000 crore of Vodafone Idea into equity and there is no question of increasing government stake any further.
There is a fundamental question that needs to be addressed: Why has Vodafone-Idea not been able to turn around when state-owned BSNL, once much-maligned as emblematic of bureaucratic sloth and labyrinthine decision-making, has turned the corner?
Business needs to be run as a business. The popular view has always been that private sector companies run on far stricter metrics, judged by the market’s ruthlessness and efficiencies rather than by bailouts.
To that extent the buck stops at Vodafone-Idea’s management. To a great degree, why shall the government continue to throw "throwing good money after bad" in expectation that things will turn around.
As a significant equity holder in the company, the government also needs to address the central question: what is the value of its 49 per cent equity in a loss-making private sector company?
In a like-to-like scenario, repeated losses in a public sector company would be a candidate for disinvestment, where the government sells its stake to a private company. Vodafone-Idea’s case throws up a peculiar situation. How does one define the government’s equity ownership in a company where it does not, seemingly, have operational involvement? By all measures, any further government bailout of Vodafone-Idea would be characteristic of the sunk cost fallacy.
To draw an analogy from the individual realm, continuing repairing a factory machinery despite repeated breakdowns and no signs of fixing would only mean perpetuating losses further.
If Jio, Airtel and now BSNL can run profitably in a highly competitive business environment and in a rapidly changing technology landscape, why can’t Vodafone-Idea? As the Telecom Minister said “They have to define their own path at the end of the day. That's the job of CEO of Vodafone Idea”. Clearly, dues not paid to the government is public money, and such funds should not be available to throw around for running loss making private companies.
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