Govt moving towards MTNL, BSNL merger: Sibal

The merger into a national telecom service company may be considered for strategic and operational synergies: DoT

The minister of communications and information technology, Kapil Sibal, on Friday, said the government was moving towards merging state-owned operators Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).

"We will take it up with the Empowered Group of Ministers (EGoM) in January or early February and then with the cabinet. I hope the synergies between the companies will help the single entity," Sibal said.

The department of telecommunications (DOT) had said both should merge.

The proposal of a possible merger had come five years ago. But, due to opposition from workers’ unions and other glitches such as MTNL being listed, the proposal was put on hold.

In May, the DoT had reinitiated the move to merge the two and had sent a note to the Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram. However, it is yet to take a call on the issue. In its note to the EGoM, the DoT had said a merger would help the telcos to compete with the private operators in a better way and they would be in a better position to tap the enterprise segment. The merger into a national telecom service company may be considered for strategic and operational synergies, the DoT had said.

Meanwhile, the merger is part of the ministry’s plan to revive the operators.

Earlier this month, the cabinet had cleared a proposal to refund the Rs 11,258 crore BSNL and MTNL had paid in 2010 for Broadband Wireless Access (BWA) spectrum in return for the airwaves held by them. BSNL had paid Rs 6,724.5 crore and MTNL Rs 4,534 crore. Both had accumulated a loss of Rs 39,314 crore (BSNL Rs 24,681 crore; MTNL Rs 14,633 crore) at the end of March, the companies informed the group of ministers looking into revival plans last year.

The government is also working on plans to hive off tower assets of BSNL. MTNL has started work on the monetisation of real estate that could fetch it Rs 5,000 crore.

Besides, the Government has also approved a pension scheme of about Rs 500 crore. Apart from a package to compensate BSNL for offering VRS to about 15,000 employees (less than 10 per cent of its workforce), the Government is also considering a land monetisation proposal similar to that of MTNL.

There is also a proposal to waive the one-time fee for BSNL and MTNL worth about Rs 12,000 crore for the additional spectrum that these two state-run companies hold.

Speaking at an event launching MTNL's service to launch free roaming between Mumbai and Delhi, Sibal said that MTNL has been burdened by some decisions taken by the government. He waa referring to the government's move to make the state-owned operators to buy 4G spectrum at commercially bid prices in an auction in 2010. The operator is now looking to return the spectrum to get back as much as Rs 4,500 crore.

"MTNL has started declining and in this position becuase of this decision. I am happy government thinks so," said Sibal. He also announced that BSNL is launching a roaming plan across its circles for Re 1 a day, for a 90- day period.

The government is also looking to solve the final glitch of the extent of spectrum usage charges (SUC) to be paid by operators, before it goes for spectrum auction. "We will clear the SUC issue before the eGoM meeting on January 27. It will be solved before the auction and the withdrawal date," said Sibal.

He also added that any decision that would be taken would hurt one set of players as spectrum has been bought at different prices at different times. "There are legacy issues. We will loom not to hurt one faction but also rationalise the sector," he said.