A parliamentary committee has proposed a merger of state-owned operators Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL), the first of which provides services in Delhi and Mumbai, whilst the latter covers the rest of the country. The Economic Times writes that the committee was formed to consider potential ways to improve the services provided by BSNL and MTNL, and found that a merger of the two companies would be good for their ‘long-term survival and success’, giving the operators a chance to compete with their privately-owned rivals. The committee was told by the Department of Telecommunications (DoT) that BSNL and MTNL were facing financial losses and declining revenues, affecting their ability to invest adequately in network expansion and modernisation, leading to coverage and service quality problems. Whilst BSNL has set out to overhaul its mobile network this year, the DoT noted that MTNL has been unable to upgrade its GSM or fixed line network for the last three to four years, due to funding constraints.
Consequently the panel found that the potential synergies and advantages from having a single, integrated national telecom infrastructure would help lower investment costs and improve the pair’s competitiveness, noting: ‘The committee, therefore, urges the government to embark upon the prospects of merger of MTNL and BSNL for which, initially, an Expert Committee could be constituted.’
The possibility of combining the two firms has been put forward numerous times in recent years as a means to save the ailing providers as they struggle to compete with private operators and rising expenses. According to TeleGeography’s GlobalComms Database, a merger of the two entities has been considered ‘too complicated’, leading to the proposals being continually shelved. Nevertheless, in recent years the proposal has begun to gather momentum and has grown in popularity, particularly as the nation’s mobile market faces a wave of consolidation on the horizon.