The government is considering the possibility of merging BSNL and MTNL in an attempt to turn around their business. Telecom secretary R. Chandrashekhar said there are valid arguments in favouri of such a merger.
The Board for Reconstruction of Public Sector Enterprises had recently recommended that MTNL and PSU telecom equipment manufacturer ITI should be merged with BSNL. “We have received the report and will take some time to consider it,” Mr Chandrashekhar said. Such a merger made a lot of sense,” he explained. “Today telecom operators are required (to operate) all across India. MTNL can’t operate outside the metros and BSNL can’t operate in metros... In today’s context it doesn’t make sense for an operator to be confined only to one part of the country or city,” said Mr Chandrashekhar.
He said a decision on the merger will take time as there are procedural problems with MTNL being a listed entity and BSNL is not listed. “At this stage this is not a decision but there are valid arguments in favour (of a merger),” said Mr Chandrashekhar.
Mr Mahesh Uppal, director of Com First, said it would be logical to merge BSNL with MTNL. “There being a single company is a good idea as the distinction is artificial. There are synergies between the two companies and there is no reason not to merge them,” said Mr Uppal. He said a merger would help both of them to deal with problems in a better way.
The merged entity will hold 12.10 per cent share of the wireless market. BSNL has been constantly losing marketshare to private players and has slumped to number four position. There is a constant threat that the Tatas will unseat BSNL anytime from the number four position too, as there is a small difference in the marketshare of the two companies. MTNL, on the other hand, has just a 0.69 per cent marketshare of the wireless telecom market and has not been able to improve its marketshare in the metros.
The government holds 56.25 per cent of MTNL and it is listed in the New York Stock Exchange and in India. BSNL is 100 per cent owned by the government. While there was a proposal to list BSNL, no concrete step was taken during the tenure of former communications minister A. Raja due to the DMK’s opposition to PSU divestment.
MTNL operates only in New Delhi and Mumbai and BSNL in the rest of the country. It was former minister Pramod Mahajan who had first mooted the idea of a BSNL-MTNL merger.