Telecom Department Said To Be Working On BSNL-MTNL Merger Proposal
While MTNL provides telephony services in Delhi and Mumbai, BSNL is present in the rest of the circles. (Photographer: Dhiraj Singh/Bloomberg)

Telecom Department Said To Be Working On BSNL-MTNL Merger Proposal

Bookmark

The telecom department is working on a proposal for the merger of Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd., as part of efforts to revive the ailing state-owned telecom firms, a source said on Tuesday.

The BSNL-MTNL merger is "one of the many components" of the overall revival plan being worked out for the two corporations, the source said, adding that a final call on the matter will be taken by the Union Cabinet.

The plan entails MTNL being merged with BSNL. MTNL provides telephony services in Delhi and Mumbai, while BSNL is present in the rest of the circles.

The move assumes significance as BSNL and MTNL have been making losses and have faced challenges in clearing staff salaries in the recent past.

The Department of Telecom is preparing a rescue plan for MTNL and BSNL in the form of a revival package that entails components like voluntary retirement scheme, asset monetisation, and allocation of 4G spectrum.

BSNL reported Rs 14,000 crore loss in 2018-19 on the back of revenue that fell to Rs 19.308 crore in the same fiscal. BSNL has 165,179 employees and their costs make up 75 percent of the company’s total income. In comparison, Bharti Airtel Ltd. has 20,000 employees and its employee cost is 2.95 percent of its income. Vodafone Idea Ltd. has 9,883 employees and its employee cost is pegged at 5.59 percent.

BSNL’s net worth stood at Rs 34,276 crore (unaudited and provisional), while MTNL had a negative net worth of Rs 9,735 crore as on April 1, 2019.

In June, Communications Minister Ravi Shankar Prasad told the Lok Sabha that there is no proposal to close BSNL and MTNL and that a comprehensive plan for their revival is under preparation.

Prasad has in the past acknowledged the role of BSNL and MTNL in maintaining "sober equilibrium" in the telecom market but, at the same time, sent out a strong message to them that they will have to "become professional".

"Let my message clearly go to these two PSUs... It is in national interest that they remain healthy, we are working on that... But, they also need to become professional,” Prasad had said on June 3 after taking charge of the communications ministry. “While I will work towards their revival, they will have to respond with professional attitude.”

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.