As telecom consolidation gathers stream in the country, the Government is mulling a merger plan of its two State-owned entities - Mahanagar Telephone Nigam limited (MTNl) and Bharat Sanchar Nigam limited (BSNl). The Prime Minister’s Office (PMO) is learnt to have directed to the MTNl to suggest viable options on the merger plan before the Government as soon as possible. A top-level meeting recently held at the PMO, discussed possibility of merging both the telecom firms which have been facing financial stress due to high competition in the sector.
A highly-placed source told The Pioneer on Tuesday, “The PMO has asked department of Telecom (DoT) to go for the MTNl-BSNl merger. The then Telecom Secretary JS Deepak discussed this issue with the MTNl chief and asked to explore the modalities for the merger of these two entities.”
The consolidation move comes at a time when major players in the sector want to make themselves as big as a global player. Bharti Airtel’s recent acquisition of local operations of Norway’s Telenor and likely merger of Vodafone and Idea are the best examples of this sort. Moreover, the dominance over major telecom operators in the country is being threatened by telecom giant Reliance Jio, which is backed by billionaire Mukesh Ambani’s Reliance Industries, which has already picked up 100 million subscribers in its first six months.
As far as the MTNl-BSNl merger issue is concerned, sources further said, “It is learnt that MTNl is working on a set of options which could be viable for the merger plan. One, the Government should either form a company for assets monetisation and repayment of loans or go for a merger of MTNl-- Delhi and Mumbai units’ operation with BSNl without loan liability. Two, there may be an option for the MTNl staff to get absorbed in BSNl with the BSNl’s pay. Third, an option is also open for voluntary retirement for employees of 55-years and above with extra increments for the remaining service.”
The meeting, headed by the then Telecom Secretary, was held about 3 weeks ago and the senior officials came up with the idea. However, the first idea of merging the two firms was mooted years ago by the then Telecom Minister Pramod Majahan and has been deliberated upon a few times since then.
As far as financial health is concerned, MTNl has been reeling under serious debt problem and is borrowing money to meet its day-to-day requirements. In written reply to the Rajya Sabha in November last year, Communications Minister Manoj Sinha had said, “In case of MTNl, it has been going slow in upgradation of equipment during the last 4-5 years due to severe financial problems. MTNl is under serious debt burden and is borrowing money to meet its day to day requirements.”
MTNl’s standalone net loss has widened to Rs 819.96 crore, surpassing its total revenue, during the three-month period ended December 31, hit primarily by finance cost. The net loss surpassed its total income of Rs 690.59 crore. The total debt of MTNl reached Rs 19,418.23 crore at the end of December 31, 2016, from Rs 11,542.3 crore in 2012-13, according to official data. In 2015-16, MTNl reported total annual revenue of Rs 3,197.41 crore and net loss of Rs 2,005.72 crore.
On the other hand, BSNl have narrowed down its losses to Rs 4,890 crore for the nine-month period of the current fiscal from Rs 6,121 crore in the year-ago period. It posted 5.8 per cent increase in income from services at Rs 19,379.6 crore during the period under review.