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Merger of BSNL and MTNL on the cards

In order to optimize its resouces and provide its customer a nationwide reach the Government of India is seriosly considering the merger of state-run telecom public sector undertakings (PSUs), Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).

According to Telecom Secretary R Chandrasekhar, “The merger of BSNL and MTNL makes sense. Today, telecom operators need to be present across India for better coverage and services. At this stage, we have not taken any decision but there are valid arguments in the favour of merger and we are considering it. It doesn’t make sense for an operator to confine only to one part of the country or city. MTNL cannot operate outside metros and BSNL cannot operate in metros, We have received the report and we will take some time to consider that.”

The final decision on the merger may take some time as MTNL being a listed entity and BSNL non-listed have different ways to manage its working. The Board for Reconstruction of Public Sector Enterprises had recently recommended that MTNL and telecom equipment manufacturer ITI should be merged with BSNL. The merger plan was first came in to limelight in the regime of Mr. A Raja but was still hanging as he was not interested or busy with other things.

The financial position of both the companies is also now good, BSNL had posted a loss of about Rs 3,000 crore last year. MTNL’s revenues have also been declining steadily. Both the companies also received third generation (3G) spectrum, ahead of auction for private players but could not take advantage of it. Due to stiff competition from private operators and low tariffs, both companies have lost substantial amount of their market share and seen a dip in their revenues.

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