Govt defers merger of BSNL, MTNL due to financial reasons

• Due to financial reasons, including high debt of MTNL, the merger of MTNL with BSNL is deferred, said IT and Telecom Minister Ravi Shankar Prasad

• The merger was part of the revival plan that the government had approved for BSNL and MTNL on October 23, 2019

New Delhi: The government has deferred the plan for the merger of state-run telecom companies Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) for financial reasons, IT and Telecom Minister Ravi Shankar Prasad has said. In a written response to a question raised in the Lok Sabha on March 10, Prasad said, "The Government approved the revival plan for BSNL and MTNL on 23.10.2019 which interalia included in-principle approval for merger of BSNL and MTNL. However, due to financial reasons, including high debt of MTNL, the merger of MTNL with BSNL is deferred," said Prasad.

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"However, close cooperation and service integration between BSNL and MTNL has been undertaken," he added.

Revival plan: BSNL, MTNL asset monetisation

The news comes a month after Minister of State for Communications Sanjay Dhotre said in February that the Alternative Mechanism of the Department of Investment and Public Asset Management (DIPAM) had approved the monetisation of 11 assets of Bharat Sanchar Nigam Ltd (BSNL) and six assets of Mahanagar Telephone Nigam Ltd (MTNL) under Phase I. While responding to a question in the Lok Sabha, Dhotre had added that three properties of BSNL and one property of MTNL have been identified for the bidding process. Asset monetisation is part of the government's plan for the revival of the two state-run telecom companies.

The backdrop

The government had approved the revival plan for BSNL and MTNL on October 23, 2019. The revival plan included measures to reduce the staff cost through a Voluntary Retirement Scheme (VRS) for employees of age 50 years and above, administrative allotment of spectrum for providing 4G services with funding through budgetary allocation, monetisation of land/building and tower/fibre assets to generate resources to retire debt, meet CAPEX and other requirements, debt restructuring by raising of Sovereign Guarantee Bonds and in-principle approval for merger of BSNL and MTNL.

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