MTNL still favours merger with BSNL, not turn its subsidiary

15th March 2005: A week before the upcoming meeting of the Department of Telecommunications (DoT) government with telecom PSUs on the synergisation process, Mahanagar Telephone Nigam Limited (MTNL) has reiterated its view that a merger with Bharat Sanchar Nigam Limited (BSNL) is the most feasible option. On the other hand, BSNL officials are tight-lipped on what they see as the best option. “Making MTNL as a subsidiary of BSNL is just not justified. If both the entities are retained as two separate entities, then the purpose of synergisation will be lost. Of all the available options, we are in favour of a merger, it maybe a straight or reverse merger,” said MTNL’s chairman and managing director RSP Sinha. ICICI Securities, which submitted its first report to the Department of Telecommunications (DoT) last month, is believed to have suggested making MTNL a subsidiary of BSNL with the former retaining an independent board.

“Also, MTNL is a listed company on the domestic bourses as well on the New York Stock Exchange (NYSE),” he added. Mr. Sinha added that MTNL and BSNL are complementing each other’s operations. “We are not competing with each other,” he said. Opting for the subsidiary route is not going to deliver the desired results of synergy, cost reduction and unified command, he added. BSNL chairman and managing director AK Sinha reserved his views, saying, “Experts along with the government will decide whatever is best for us. It will not be appropriate for me to comment, right now.” DoT has called a meeting of all stakeholders and the consultant on March 21 to discuss the future course of action on the basis of options given by the consultant.

Silicon Valley Infotech Board approves merger ratio of shares

14th March 2005: Silicon Valley Infotech Ltd has informed BSE that a meeting of the Board of Directors of the Company at its meeting held on March 14, 2005 has approved amalgamation of Pentasoft Technologies Ltd with the Company with effect from January 01, 2005 subject to the required approval and the valuation report of the Company submitted by R Swaminathan & Co., Chartered Accountants, Chennai. The merger ratio of shares between the Company & M/s Pentasoft Technologies Ltd has been fixed 1:2 i.e., 1 Equity share of the Company of Re 1/- each will be given against 2 equity shares of Rs 10/- each of Pentasoft Technologies Ltd.

No purpose in making MTNL a BSNL subsidiary

14th March 2005: Ahead of a crucial meeting of DoT with the two PSUs to decide on the next step towards synergise their operations, MTNL on Monday said that making it a subsidiary of BSNL will not yield the desired result behind the proposed move. ICICI Securities, which submitted its first report to DoT last month, is believed to have suggested making MTNL a subsidiary of BSNL with the former retaining an independent Board.

“This suggestion does not give any benefit or result, which was visualised in case of merger as these two companies will remain separate entities and will have to maintain an arm's length distance," MTNL CMD R S P Sinha said. "This is because MTNL is a listed company at domestic bourses as well at New York Stock Exchange (NYSE)," he added. Sinha also said that MTNL and BSNL are complementing each other's operations. "We are not competing with each other", he said.

ICICI Securities has short-listed four options for the proposed process, according to the first report of the bankers. The options are merger of two PSUs or making one a subsidiary of the other based on a 5-point criteria -- competitive position, shareholder value, cost implication, execution difficulties, including where the funds will come from and time period. DoT has convened a meeting of all the stakeholders and the consultant on March 21 to discuss the future course of action on basis of options given by the consultant.