The merger of BSNL-MTNL may be announced in parliament

30th September 2004: To increase the presence of public sector telecom companies, the Government is considering merging BSNL and MTNL, and an announcement in this regard could be made in the winter session of Parliament. The sources related with the procedure said, "With high stakes involved in the merger to create a Rs 35,000 crore PSU monolith, some of the coalition partners may want the Government to make an announcement in this regard in Parliament, when it meets for the winter session." The government may have started initial consultations with the Left parties over the merger issue and there are indications that some of the partners have insisted on a Parliamentary route to announce it so that the Government on the floor of the House could address their queries and anxiety.

While certain workings that may have an impression on the merger like MTNL being a listed company while BSNL is not and the pay and service conditions of the two also are different, the MTNL Staff Union (Class III and IV) is opposed to the merger. The sources said modalities could be worked out over the merger including appointment of merchant bankers and advisors. Shakeel Ahmad, the Minister of State for IT and Communications said in Chandigarh that the government was working out the modalities for the merger. "A number of suggestions are coming for the merger of BSNL and MTNL, and the government is working out modalities in this regard," he had said. He added, "The future of BSNL and MTNL is assured as there will be no disinvestment in the two public sector units."

From the time when Maran took over as the Communications Minister, the discussion concerning to merger got the impetus. The Department of Telecom held a meeting to explore possibilities. If merged, the combined entity would have a turnover of Rs 35,000 crore compared to its private sector rival Bharti that has a turnover of Rs 5,000 crore. One of the options is a reverse merger of BSNL with MTNL as the latter is a listed company, sources said, adding the Government could also create a holding company to synergise the operations and safeguard the commercial interests of the profit-making PSUs. BSNL and MTNL together share over 95% of the fixed line market share.

MTNL and BSNL possibly will merge

20th September 2004: In the first ever indication of a possible merger of the two telecom PSUs, MTNL and BSNL, the government on Thursday said it was appointing advisers for synergising their operations. Communications minister Dayanidhi Maran said, “We are in the process of appointing advisers for synergising the operations of MTNL and BSNL.” Asked if it was a prelude to a merger, he said one was free to interpret it in whatever way one wanted. “It could be a merger, or it could be the taking over of one company by the other,” he said.

Since Mr. Maran took over the ministry in May this year, the talks of merger of the two PSUs had gained momentum. In the same month, the department of telecommunications (DoT) had held a meeting with former chairmen of BSNL and other senior officials of the PSUs to look at the possibility of a merger to beat competition from the private sector. If merged, the combined entity will have a turnover of Rs 35,000 crore. Its private sector rival Bharati, has a turnover of just Rs 5,000 crore. Among the options the government could be looking at is the reverse merger of BSNL with MTNL, as the latter is a listed company in India and abroad. It could also sell 5% of BSNL’s equity in the market to get a valuation.

Yet another suggestion that came up during the consultations was for creating a holding company to synergise the operations and safeguard the commercial interests of the two profit-making PSUs. Both BSNL and MTNL command over 95% of the fixed line market share. The proposed merged entity will be almost seven times the size of Bharati, going by revenues in financial year 2003-04. The total fixed line subscriber base for the entity will be more than 4.2 crore, way ahead of its competitors.

Government to synergise MTNL, BSNL

17th September 2004: The telecoms minister said on Thursday that the Central government is planning to appoint bankers to advise it on synergising the operations of state-run telecom firms Mahanagar Telephone Nigam Ltd. (MTNL) and Bharat Sanchar Nigam Ltd. (BSNL). "A synergy can be a merger or an acquisition," Dayanidhi Maran told reporters. "We are in the process of identifying good advisors".