No plans for MTNL/BSNL merger, says minister

3 Aug 2017

Indian telecom minister Manoj Sinha has denied reports that the government intends to merge state-owned telecom providers Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The Economic Times quotes the official as saying in a speech to parliament yesterday that there are, at present, no proposals to merge the two entities, but given MTNL’s recent financial performance the operator has been classified as an ‘Incipient Sick Central Public Sector Enterprise (CPSE)’. As such, and in line with the Department of Public Enterprise (DPE) guidelines, ‘the Department of Telecommunications (DoT) has to formulate revival/restructuring/closure road map for MTNL, the process of which has been initiated.’ MTNL’s net loss for the period 2016/2017 financial year widened to INR29.63 billion (USD465 million) from INR19.46 billion in the preceding year.

The prospect of merger of the two operations has wavered in popularity since it was first proposed around a decade ago, with proponents arguing that by removing the geographical separation – MTNL operates in the Delhi and Mumbai circles whilst BSNL serves the other 20 areas – the enlarged company could compete more effectively with its privately-owned rivals, whilst opponents have dismissed the plans as too complicated. As previously reported by TeleGeography’s CommsUpdate, the Mr Sinha’s predecessor rejected the idea of a merger in early 2015 but the proposal has since regained momentum, with a senior MTNL official noting in April 2016 that a merger was expected within the subsequent three to four years. Most recently, in March 2017 a parliamentary committee recommended combining the two firms as a means to ensure their ‘long term survival and success.’