Merging State-Run Telcos BSNL And MTNL Can Solve Their Problems, Say Experts
MTNL, which only has a presence in Delhi and Mumbai, will be able to broaden its network if it merges with BSNL, as it has valuable assets
Mar 26, 2019 / 10:50 AM IST
Troubled state-run telecom companies Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) should consider a merger to solve their financial problems, experts said.
MTNL, which only has a presence in Delhi and Mumbai, will be able to broaden its network if it merges with BSNL. It already has assets and its debt burden is lesser than many private telcos. Both companies can together utilise their real estate assets and the spectrum.
"Everyone seems to be consolidating, and MTNL and BSNL should revisit this proposal," Annie Morees, formerly with the Department of Telecommunications (DoT), told Business Standard.
Political interference and policy issues cost MTNL the place it once held as a reputed telco. It lost customers and credibility in the industry and now is overstaffed with close to 23,000 workers. The company's main expenses are staff-related.
"MTNL had a great opportunity to consolidate in the two prime circles of Delhi and Mumbai. 3G spectrum was given to MTNL but political interference is one of the many reasons the company could not achieve what it had set out to," an industry expert told the paper.
The company had planned to give up its 3G spectrum which would raise Rs 3,500 crore. These funds would then be used to meet the operational costs of the company.
MTNL has loans worth Rs 20,000 crore, which it aims to convert into a sovereign guarantee with full responsibility for the principle and interest payment. MTNL had also planned to foray into 4G if the government offered to finance it. The telco wants the Centre to monetise its unused real estate assets to get fresh funds.
It was reported last month that BSNL was unable to pay the salaries of its 1.78 lakh employees for the month of February due to financial constraints. BSNL will ask the government to allow the PSU to let out its land to other state-run companies. A bailout package worth Rs 13,000 crore is in the works for BSNL. MTNL has also not paid its employees for the past two months.
BSNL expects to report a loss worth Rs 7,000 crore in FY19, including a Rs 4,000 crore operation loss.