BSNL and MTNL could merge to take on competition

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BSNL (Bharat Sanchar Nigam Limited) and MTNL (Mahanagar Telephone Nigam Limited) could soon become a single entity, for the Department of Telecom is planning a merger proposal, with the Cabinet to review it. The department is working on multiple aspects, with the proposal likely to be ready by June.

BSNL and MTNL could merge to form a single entity, with planning currently underway.

A report prepared by the Standing Committee on Information Technology stated this recently.

With a number of private players looking at merger options to take on Reliance Jio, authorities at both MTNL and BSNL would also look at consolidating their position. Bharti Airtel has already begun proceedings to acquire Telenor, while Vodafone and Idea Cellular are also in talks to merge. Reliance Communications and Aircel have also received the nod of approval from the Competition Commission of India.

These mergers could lead to four main players in the Indian market, with the telecom ministry keen on having a government operator to keep a tab on cartelisation.

MTNL currently operates in New Delhi and Mumbai, in addition to offering services in Mauritius. BSNL operates in other Indian towns and cities. While MTNL has a base of around 37 lakh customers, BSNL has around 8.50 crore users.

The number of employees at BSNL and MTNL are around 2 lakh and 45,000 respectively. A single entity would require planning at multiple stages, including dealing with employee unions. The talk of a merger has done rounds in the past as well, failing to materialise.

BSNL reported a loss of Rs.3,880 crore in the FY 2015-2016, while MTNL registered a loss of Rs.2,005 crore during the same period. Revenues of these state-run entities stood at Rs.32,918 crore and Rs.3,197 crore respectively during the FY 2015-2016.

The debt for BSNL and MTNL stood at Rs.7,666 crore and Rs.13,529 crore respectively (as of February 2016). A merger could lead to better utilisation of resources, but officials are wary about rushing the process without planning.

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