Source - The Telegraph, Calcutta :       Buzz on BSNL  - MTNL Merger        

The department of telecom (DoT) has revived the plan to merge Bharat Sanchar Nigam Ltd with Mahanagar Telephone Nigam Ltd. The DoT has asked the two service providers to synergise their operations and function as one entity to offer services on a pan-India basis. The telecom department plans to set up a multi-stakeholder committee to develop a restructuring plan for the firms. “There are valid arguments in favour of the merger and we are considering it. However, even if the two entities are not merged immediately, they can, at present, work out a mode of functioning as a pan-India service provider,” DoT officials said.

Analysts said one of the benefits of functioning as a single entity could be seamless connectivity for subscribers without any roaming charges. At present, BSNL and MTNL have roaming arrangements with each other. The move will also give the PSUs an opportunity to expand in the face of dipping revenue and market share. Both the companies have lost a substantial amount of market share and seen a dip in revenues because of low tariffs and stiff competition from private operators. The PSUs together enjoy around 12 per cent share of the mobile market. For the first time since its inception in 2000, BSNL had suffered a loss of Rs 1,823 crore in 2009-10. MTNL’s loss stood at Rs 1,099.5 crore in the fourth quarter ended March. The DoT has been considering the merger for two to three years. However, opposition from employee unions, different organizational structures and the fact that MTNL is a listed entity while BSNL is not stood in the way of a concrete decision.

According to MTNL chairman and managing director Kuldip Singh, “The merger is for the government to decide, but bringing synergy is one of the objectives of the merger. The idea of synergy is to provide seamless connectivity to the customers.” He said single window services such as one billing and redressal mechanism for subscribers of both the firms were being looked into. MTNL offers services in Delhi and Mumbai, while BSNL operates in the rest of the country. Both have received third-generation spectrum before the auction for private players but could not take advantage of it. The Board for Reconstruction of Public Sector Enterprises had recommended the merger of MTNL and telecom equipment manufacturer ITI with BSNL.