BSNL posts profit after 18 yrs, but auditor has doubts on staff costs

BSNL says changes in accounts reflect industry practice and relevant accounting standards permit them

- Jatin Grover

Bharat Sanchar Nigam Ltd (BSNL) reported its second straight quarterly profit after 18 years, a milestone suggesting that the state-owned telecom operator's fortunes are changing. Yet, this performance was largely driven by accounting adjustments that its auditor has flagged. What also helped is the sale of land, buildings and other infrastructure, and a change in how it depreciates the cost of airwaves.

For BSNL, employee costs are a key factor as these accounted for over 34% of its ₹20,841 crore revenue from operations in FY25. A decline here supports its profit.

In FY25, the company moved ₹1,042 crore of its employee expenses towards 'Capital Work-in-Progress' (CWIP), much higher than ₹114 crore in FY24 and ₹57.5 crore in FY23, according to its financial statements. The bulk of this, or ₹997 crore, was shifted in the past two profitable quarters.

Operating expenses or day-to-day costs of running the business (including salaries and rent) reduce profit in the short term. These are transferred to CWIP when a company is building long-term assets such as a new factory or, in the case of a telecom operator, installing 4G equipment and laying fibre.