State-run Bharat Sanchar Nigam Ltd (BSNL) plans to invest Rs 42,000 crore or roughly $10 billion over the next three years, mainly on network expansion, in order to take on private sector players who are rapidly gaining territory and strength.

"Our mobile expansion is on track. We have rolled out 25 million lines all-India and this capacity kicks off in August. We have announced tenders for another 93 million lines and are adding two million lines in WLL", Kuldeep Goyal, CMD, BSNL told ToI.

According to sources in BSNL, its revenues have dipped 6% to Rs 32,500 crore in 2007-8 from Rs 34,600 crore in 2006-7, while net profit is down to Rs 292 crore. BSNL, which controls over three-fourth of the near Rs 27,000 crore fixed line revenues, serves as much as 80% of India's 39.5 million fixed line subscriber base.

Its fixed line revenues have been flat over the last two years despite the fact that this segment incurred a decline of over 10% in revenues across India and over 20% in subscriber base between fiscal 2006-7 and 2007-08.

BSNL's performance in mobile telephony has been better than fixed line business, clocking a near 13% increase in revenue to roughly Rs 10,600 crore. However, this is but a shadow of an over 35% industry growth rate which saw a majority of India's leading GSM operators like Bharti, Vodafone, Idea, Aircel, Spice and MTNL growing at over 40% in this period.

While BSNL continues to be the largest service provider in national long distance (NLD/STD) and fourth largest in international long distance, its NLD revenues have witnessed a massive 40% decline. These worrying numbers, controversies regarding its mobile equipment tenders preventing rapid expansion, rapid competitor growth and a potential merger with loss-making ITI Ltd indicates that these investments are critical for BSNL's survival.

BSNL is now turning towards broadband, network monitoring and managing MPLS networks for big corporates for its next big growth push. "We are in talks with international firms like Cable and Wireless and British Telecom to carry overseas traffic through Virtual Private Networks (VPNs) and Managed Private Leased Services (MPLS) for big corporates," said Goyal.

"Broadband penetration is another focus area for BSNL which has a capacity of four million lines of which 2.3 million are in use, representing an over 50% share of the total four million broadband connections in the country," added Goyal.