Mumbai, March 19:
The proposed merger between state-owned Bharat Sanchar
Nigam Ltd and Mahanagar Telephone Nigam Ltd will have to overcome a
number of regulatory and operational issues, including bringing parity
between the pay scales of the employees of the two companies. The Centre
will also have to address the complexities around de-listing of MTNL
shares.
The proposal to find synergies between the
two public sector telecom companies was first mooted in 2002 by the then
Communications Minister Pramod Mahajan. A committee under the
Department of Telecom Secretary was formed to look into its feasibility.
However, this was put on the backburner due to huge bottlenecks,
especially in dealing with the concerns of the employee unions of the
two companies. BSNL has over two lakh employees and MTNL close to
45,000.
“The issues that scuttled the merger between
the two PSUs then, continue to exist even now. So, one is not sure how
the Centre will push this through. On the other hand, the market
dynamics has changed drastically. Back then, the two PSUs were the
dominant players; now, they are not even among the top three operators,”
said a former BSNL executive.
“Over the last 10
years, the proposal to merge MTNL and BSNL had been revived several
times and then shelved. There is clearly synergy between the two
operators, especially on the infrastructure side,” said another former
telecom official.
Proposals by consultants
International
consultants, including McKinsey, JM Morgan Stanley and KPMG Consulting,
had suggested different ways it could be implemented. One suggestion
was that BSNL’s assets should be acquired by MTNL in a phased manner.
Another suggestion was that MTNL should acquire a controlling stake in
BSNL.
A committee headed by Sam Pitroda, Advisor to
the Prime Minister, had also suggested a number of things, including
hiving off the telecom companies’ infrastructure into a separate unit to
unlock value.
According to a senior executive with a
private telecom operator, the merger may be a little too late to make
any significant impact. BSNL’s market share in the mobile telephony
segment declined to 7.96 per cent while MTNL’s share has declined to
0.36 per cent from 0.58 per cent.
A Parliamentary
committee report said that the advantages these PSUs had in the past,
viz., extensive infrastructure in remote areas, their pan-India reach,
huge optical fibre infrastructure, strategic alliances with IT and
hardware companies, etc., have now dissipated.
“The
Committee is, therefore, of the considered view that if the current
trend of incessant shrinking of market share of BSNL and MTNL continues,
both these entities would soon become commercially non-viable and a
burden on the exchequer,” the report stated.
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