MTNL-BSNL merger route by November-end

The government is likely to finalise the route of merging the two state-owned telecommunications firms - MTNL and BSNL "" by end of November 2004.

Shakeel Ahmad, the minister of state for communications and information technology, told Business Standard, that the merger will be affected by end of this year.

While confirming that the government was looking at various options of merging the two entities, the minister pointed out that "we are evaluating three option to facilitate merger. The latest being buying back MTNL's shares from public."

MTNL shares are listed on the stock exchange while BSNL is a wholly owned company of the government.

Shakeel Ahmad was speaking to mediapersons on the sidelines of the Communique '04 VIII National Telecom Seminar organized by the Symbiosis Institute of Telecom Management in Pune.

The other options considered by the government include divesting 5 per cent stake in BSNL and list it on the bourses and then merge the two companies.

Also setting up a holding company with whom the shares of both the telcos will be placed, is also being actively considered, the minister pointed out.

Ahmad also pointed out that the government was in the process of getting comments from all the concerned parties in the telcos.

"It is imperative and important to get comments and views of the various departments of these two telcos and also the ex-officials. What is important is that there should be synergy of operations."

Also the ministry will get advice from consultants to strengthen the synergies between the two state-owned companies. The government first mooted the proposal for merging these two service providers way back in 2001.

Pramod Mahajan, the then minister of telecommunications had favoured the idea. Even the senior officials of these telcos have favoured the proposal.

A K Sinha, chairman and managing director of BSNL recently pointed out in Mumbai that "there is an urgency from the government to merge the two companies".

Considering the technology and regulatory changes in the telecommunications, it makes sense for the these telcos to be merged, government officials had stated.