Centre Announces Merger Of BSNL, MTNL To Revive State-Owned Telecom Entities

The Centre on Wednesday announced that the Union Cabinet had approved a revival plan for the Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) and had decided "in principle" to merge the two entities.

Telecom Minister Ravi Shankar Prasad, in a press conference, clarified that neither MTNL nor BSNL was being closed or divested, allaying apprehensions of employees and users.

"The government is neither shutting nor divesting stake in MTNL and BSNL," he said.

Prasad added the move was to ensure the revival of state-owned telecom firms. The government will issue sovereign bonds to the tune of Rs 15,000 crore to revive the two legacy telecom companies. The government will also monetise assets worth Rs 38,000 crore to strengthen the firms. The Centre also plans to offer voluntary retirement scheme to its employees.

"The cabinet also approved an attractive VRS package for the employees which has been slightly tweaked from the original Gujarat model. The government will provide 4G spectrum on an administrative allocation basis.

"The cabinet has also given in-principle nod to the merger of BSNL and MTNL and till modalities are in place, MTNL will be a subsidiary of BSNL," he said.

Mahanagar Telephone Nigam Ltd (MTNL) offers services in Delhi and Mumbai. Bharat Sanchar Nigam Ltd (BSNL), on the other hand, operates across the rest of India.

Cut-throat competition and entry of Jio on free voice and cheap data prices led to consolidation in the Indian telecom sector with many small telcos shutting shop under losses and currently only Jio, and Airtel are left along with the merged entity of Vodafone and Idea.

MTNL is listed but has its net worth already eroded. BSNL is unlisted. 

The PSUs' merger has been discussed many times in the last 10 years but due to HR and listing issues, it could never be taken up. BSNL has an estimated loss of Rs 14,000 crore in 2019 fiscal and MTNL has been in deep losses too.

BSNL is a 3G mobile player with sporadic 4G services on hotspots and on old 1900/2100 spectrum bands. It has 12 crore mobile subscribers and an 11 per cent market share.

(With inputs from IANS)