MTNL-BSNL to merge by mid 2005

Our Corporate Bureau
27 October 2004

"Six merchant bankers will make presentations to the union government this month-end and modalities for the merger will be worked out within the next three or four months," Maran told reporters here.

If merged, the combined entity will have a turnover of Rs35,000 crore compared to its largest private sector rival, Bharti Tele-Ventures, which has a turnover of Rs5,000 crore. BSNL and MTNL together command over 95 per cent of the market for fixed lines.

Maran denied any plans to sell the government stake in telecom PSUs. "The common minimum programme is very very clear. We are not interested in selling profit-making PSUs. Even loss-making PSUs, will not be sold, we will try to revive them, instead," he said.

Earlier, Maran told delegates at the International Conference on Telecom that the Indian telecom sector would need estimated additional investments worth roughly Rs160,000 crore to meet the target of 200 million telephones by 2007.

Maran expressed concern about Indian companies not paying attention to indigenous manufacturing of telecom equipment and R&D, especially as duties on telecom equipment will be zero from April 2005. "I am concerned that even as we are planning major investments in this sector, our own companies are not in a position to take advantage of such investments and that the benefit will accrue to other countries," he said.

Sony Ericsson, Alcatel, LG and Samsung have shown interest in setting up manufacturing bases in India to avail cheap labour in India. He said that so far the Indian telecom industry had attracted foreign direct investments worth only $2.5 billion. The government is currently working to increase FDI inflow to the sector. The recent announcement to increase FDI limit from 49 per cent to 74 per cent is a step in that direction, he said.