By doing that, both the companies only stand to gain as it will enable the two to utilise their real estate assets and the spectrum, experts saidNew Delhi: To solve the financial woes of battered state-owned telecom companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), experts believe that they should be merged. By doing that, both the companies only stand to gain as it will enable the two to utilise their real estate assets and the spectrum, experts said. MTNL, which has a presence only in Mumbai and Delhi, will be able to expand its reach. It also already has assets and its debt burden is lesser than many telcos.
"Everyone seems to be consolidating, and MTNL and BSNL should revisit this proposal," Annie Morees, who worked with the Department of Telecommunications (DoT) previously, told Business Standard.
'Political interference wrecked MTNL'
According to an industry expert, even though MTNL's arc of influence was limited, it had a great opportunity to consolidate the two prime circles of Delhi and Mumbai. However, it lost customers and credibility mainly due to political interference, the expert added. The company is now overstaffed with close to 23,000 workers and is struggling to make profits. Its main expenses are staff-related.
The telecom company had also planned to give up its 3G spectrum to raise Rs 3,500 crore so that it could use the funds raised from the sale to meet its operational costs.
MTNL has loans worth Rs 20,000 crore. It plans to convert the same into a sovereign guarantee with full responsibility for the principle and interest payment. MTNL is also eyeing a 4G spectrum; however, it is dependent on the government to finance it. MTNL has been asking the government to monetise its unused real estate assets to raise funds.
BSNL continues to be in despair
BSNL, too, continues to be in a state of despair as it failed to pay salaries to its employees for the month of February. It is also seeking permission from the Centre to let out its real estate assets to other public sector companies in order to get funds. The government is also believed to be working on a Rs 13,000-crore bailout package for BSNL.
The state-run company reported a loss of Rs 7,000 crore this fiscal, including a Rs 4,000 crore operation loss. It is also facing stern protests from its employees' union over its failure to secure a 4G spectrum from the government.
PSU Watch is a business news brand of 27 Frames Communications LLP. It places the spotlight on PSUs, Governance, Bureaucracy, Defence and Public Policy as the sector traverses through a period of radical change.