MTNL, BSNL merger still on drawing board

DoT yet to set up panel

The department of telecommunications (DoT) will take calculated measures while deciding the future of the two public sector telecom majors, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

"We are engaging our attention to work out an optimum solution for the future of the two entities," Nripendra Misra, chairman, Telecom Commission, and secretary, DoT, told Business Standard.

"We, however, have not set up any formal committee to address this issue," he said in the context of some news reports that said the department had set up a special committee to look into the merger issue.

Misra did not want to comment on the future course of action the government planned to take. "Both MTNL and BSNL are interested in expanding their service areas. This makes us consider the various alternative models of operation for the two telecom service providers," he said.

He said the Telecom Commission was consulting retired officials and other specialists in this area. Investment bankers like Merill Lynch had also made presentations.

"We will consider each and every option that is technically and financially feasible, before finalising our move," Misra said.

Differences in the structure of the two entities, remuneration of employees and a host of other problems are issues which the government has to address before planning a merger.

Besides merging the two, other options being explored include acquisition of MTNL by BSNL or acquisition of BSNL by MTNL and creation of a holding company.

In 2002, the then minister for communications, Pramod Mahajan, had announced the government's intentions to merge the two telecom companies.

The issue went into cold storage after Arun Shourie succeeded Mahajan as the minister for communications and the issue came up for discussion again when the present government took charge.