Govt Mulls Bsnl, Mtnl Merger

Communications minister Pramod Mahajan has proposed a merger between telecom majors Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd. The minister has asked the department of telecom to work out the modalities of such a merger which would include a formula for protecting the interest of the 4 lakh employees working in the two PSUs.

In a freewheeling interview with Business Standard, Mahajan also said that the ministry was planning to remove the universal service obligation from the private basic operator's licence conditions and instead ask BSNL to take on the mandate of putting up village phones in one lakh villages.

The ministry has also formalised a migration package for the paging sector which involves allowing the paging companies to move from a fixed licence fee regime to a revenue sharing basis. Mahajan also said that ministry is in favour of relaxing the foreign direct investment cap on the telecom services sector from 49 per cent to 74 per cent.

Explaining the rationale for merging MTNL and BSNL, Mahajan said that technology had removed the geographical barriers in telecom. The move would also give MTNL the leeway to expand in areas other than Mumbai and Delhi. Also, once the two PSU were merged, the government would get better returns from the disinvestment of this large entity if it was undertaken at some stage.