Senior BSNL, MTNL officials oppose merger

Praveen Chandran
14 September 2002

Mumbai: The proposed merger between Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) is likely to hit a roadblock following stiff opposition from senior officials of both the state-owned telecom companies.

The internal committee, which was constituted to study the viability of the merger, met for the first time on 18 September 2002. Sources say BSNL and MTNL committee members have decided to oppose the move towards consolidation. The committee, which also has representation from the telecom ministry apart from the officials of both the companies, is likely to submit its report by December 2002.

We are confident that we will convince [Communication and IT Minister Pramod] Mahajan not to move ahead with the merger proposal and we are confident that he will understand. The move will not be fruitful, says a BSNL board member. On 30 August 2002, Mahajan proposed the merger of MTNL and BSNL. It is believed that he suggested the proposal to stem any step to divest the governments stakes in these public sector units (PSUs) by the divestment ministry. Mahajan is against any move towards divesting the government stake in MTNL, which is currently at 52 per cent.

Mahajan has decided to go for strategic divestment of MTNL, which offers basic and cellular services in Mumbai and Delhi. A divestment of the consolidated entity will be difficult as the corporation may be valued at Rs 70,000 crore.

I have asked the department of telecommunications to prepare a comprehensive plan to merge the two PSUs and I hope the final decision will be taken soon. If I can sort out the employees issue amicably then I will go for merger immediately, Mahajan had said. He had also said that the division of MTNL and BSNL was artificial and not functional. MTNL was earlier a part of BSNL.

MTNL is listed both in the domestic as well as overseas markets. BSNL has a net worth of over Rs 60,000 crore and that of MTNL is about Rs 7,100 crore. BSNL has a staff strength of nearly 3.5 lakh while MTNL has over 50,000 employees.