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Govt. considering MTNL, BSNL merger
By siliconindia
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Wednesday, 04 September 2002, 19:30 IST
NEW DELHI: The Government is considering a proposal to merge the two state run entities Bharath Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The merger, if it goes through, would create the country's largest telecom company by sales.
Speaking to press persons Monday, Communications Minister Pramod Mahajan said "One must think of some kind of synergy between the two telcos and we have thought that if we bring them together it will be a very powerful telecom entity, which will be able to work in a competitive environment."
MTNL provides fixed-line, mobile phone services and Internet access in Mumbai and New Delhi. BSNL provides fixed-line telephone services across India except where MTNL is the market leader.
"You can't have two companies run by the government, one looking after rural areas and another looking after urban areas," Mahajan said. "If the government wants to be in this business it should look at the country as a whole."
BSNL and MTNL were monopolies until the late-1990s but have faced competition from a clutch of domestic and foreign private firms since India liberalized its telecoms industry, billed as one of the fastest growing markets globally in this decade.
BSNL, wholly-owned by the government, is India's biggest telecom firm with sales of Rs 220 billion ($4.5 billion). It rolled out its nationwide mobile service on Monday. New York Stock Exchange-listed MTNL, in which the government owns around 56 percent stake, posted revenue of Rs 61.47 billion in the year to March 2002. Mahajan said the communications ministry was preparing a document on the proposed merger, but did not specify a timeframe.
He said a number of legal and employee issues related to about 410,000 workers in both companies had to be sorted out. "Definitely we have this concept in mind and we are preparing a paper," Mahajan said. "At least for the future let us think of MTNL and BSNL together, let us not divide them."
MTNL has an estimated 5. Million fixed-line users. Mahajan did not comment on MTNL's privatization and said there were no plans to privatize the BSNL as its valuations were still to be worked out.