BSNL and MTNL directed to ‘synergise’ operations

16 May 2011

The official tie-up of Indian state-owned operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) appears to have taken another step forward, with the Indian Economic Times reporting that the government has instructed the duo to ‘synergise their operations and function as one entity, pending their merger, offering pan-India services.’ The report cites telecom secretary R Chandrasekhar as saying: ‘We have directed them to actually work out a plan to synergise their operations so that even if they are two separate entities they can work out a mode of functioning as a pan-India service provider.’ The official did note however that previous attempts at unifying the operations of the two had run into trouble as a result of a number of factors, including MTNL’s shareholding pattern, and the issue of salary and pension structures at both operators.

As noted in TeleGeography’s GlobalComms Database, a merger of BSNL and MTNL was first mooted as far back as September 2002, with the government having considered abolishing the geographical split between the pair to create a single company that could compete more effectively in the liberalised telecoms market. Despite a Department of Telecommunications (DoT) panel examining the proposals, by September 2007 the state said that all proposals for the merger of the two were on hold, and despite reports in January 2008 that BSNL’s pre-requisite initial public offering (IPO) was back in the frame, by end-2008 both the IPO and merger plans appeared to have stalled indefinitely. More recently in March 2011 it was reported that the DoT had revived merger plans for the state-owned duo, with a government panel investigating the matter also suggesting that government-owned hardware vendor Indian Telephone Industries (ITI) could be included as part of the enlarged entity.