BSNL and MTNL to get merged for revival
By MYBRANDBOOK
The government has decided to merge state-owned telecom companies Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL). Analysts think that the step has come too late and might not meaningfully revive both companies. They, however, believe that the proposed measure will create some competition for private players and contain operational costs.
The government on Wednesday decided to merge these two as part of a revival package, which includes raising Rs 15,000 crore via sovereign bonds, monetising assets amounting to Rs 38,000 crore and a voluntary retirement scheme (VRS) for employees over the next four years.
According to analysts, BSNL, which was once a Navatna company, became a sick one, with accumulated losses of more than Rs 90,000 crore. This is the consequence of BSNL’s inability to compete with nimble and more efficient private players like Reliance Jio and Bharti Airtel. With a bloated workforce of 1,76,000, BSNL is simply uncompetitive. Only a drastic restructuring with an effective VRS package can give these companies (MTNL and BSNL) a chance of revival.
Independent market expert Ambareesh Baliga sees the bailout package as a lavish funeral budget for a terminally ill patient. The government, he says, is trying to provide an honourable exit to the employees and will finally shut down a majority of its operations.
The biggest issue with both BSNL and MTNL, according to him, are the employees belonging to the ‘monopoly’ era. It’s difficult to change the mindset to suit today’s ultra-competitive environment; that has been one of the major reasons for their decline.
MTNL was set up on April 1, 1986, by the government to expand the telecom network, introduce new services and raise revenue for telecom development needs of India’s key metros - Delhi and Mumbai. The company is also present in Nepal through its joint venture, United Telecom Limited (UTL), and in Mauritius through its 100% subsidiary, Mahanagar Telephone Mauritius Limited (MTML).
BSNL, on the other hand, was incorporated on October 1, 2000, and took over the business of providing telecom services and network management from the erstwhile Central Government Departments of Telecom Services (DTS) and Telecom Operations (DTO). According to reports, BSNL is India’s oldest communication service provider and its history can be traced back to the British era.
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