BSNL, MTNL merger likely by July next year

New Delhi: The much-awaited merger of telecom public sector undertakings (PSUs), Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), is likely to take place by July next year as the two companies look at synergising operations by offering services as a single entity.

At present, BSNL offers services in the entire country except Delhi and Mumbai. MTNL provides telecom services in these two zones.

“The deadline of June-July 2015 has not been officially commissioned to the organization but the merger is likely to take place in the time frame,” BSNL director (consumer mobility) Anupam Shrivastava said.

He added there are some matters which need to be sorted out before the merger takes place, including salary issues and the debt on MTNL’s books.

“Commercially, it makes sense for the two companies to merge as it will lower the tax outgo. Currently, BSNL is billing MTNL and vice-versa for services for which both are paying taxes. If it becomes one entity, the tax outgo will be less,” Shrivastava said.

He, however, said before the merger, there are some issues which need to be resolved.

Shrivastava said the first issue is that MTNL is a listed company and the government has to see how it can be merged with BSNL. One option could be that the government buys back MTNL shares, he said.

“The second thing is the salary difference between the two firms. The salary of MTNL employees is higher than BSNL, so that issue needs to be sorted out,” he added.

The other issue is about the debt on MTNL’s books, which is a big concern for BSNL.

Shrivastava said in order to resolve the issue, the government can provide a soft loan to the new entity.

On the merger, minister of communications and information technology (IT) Ravi Shankar Prasad said in a interview to DD News, “There is an idea on consideration, we have not taken a final call.” Prasad said as of now, the companies must be revived. “I personally monitor the functioning of both these departments as to how many towers are functioning, the names of chief general managers are there, their mobile numbers are there, I talk to them directly... so monitoring is done at my level also,” Prasad said. Prasad had also met the senior management of BSNL and MTNL recently to discuss the blueprint for reviving the loss-making PSU telecom companies. The total debt of the two firms increased to Rs.21,208 crore at the end of June 2014. The public sector firms are also losing market share. The market share of BSNL has been reduced to 12.3% at the end of May 2014 from 13.27% at the end of March 2012, while that of MTNL stood at 4.83% at the end of May 2014. In 2012-13, MTNL recorded a net loss of Rs.5,321.12 crore on an annual revenue of Rs.3,428.6 crore. BSNL’s losses, according to unaudited results, stood at Rs.8,198 crore for 2012-13.

PRASHANT SHARMA

PGDM III SEM