India has again revived its efforts to merge state-run telecom operators, Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL) by roping in audit and consulting firm Deloitte as transaction advisor.
The plan also includes looking into the legal complexities of delisting smaller telco MTNL from the stock exchanges. Deloitte has been tasked to provide a detailed report on the legal issues and how to move forward with the delisting process.
Notably, the merger has been deferred multiple times over the last decade due to financial reasons and the inherent complexities involved. However, the government is now exploring synergies between both telcos to create a competitive entity which can operate at par with private telecom operators.
These things take time
“Since MTNL is a listed company, the process takes time. The transaction advisor will have to go through the process related to the merger and then they will come back,” telecom secretary K Rajaraman was quoted as saying in the Financial Express newspaper.
He also told the newspaper that the government will also consult markets watchdog Securities and Exchange Board of India.
The Department of Telecommunications (DoT) plans to complete the merger of MTNL and BSNL by the end of next year.
BSNL currently maintains MTNL’s mobile network in Delhi and Mumbai. The DoT believes that the merger is necessary for the revival of both operators.
“One entity needs to operate at a pan-India level to provide seamless services to consumers. Now that BSNL’s 4G services are ready to be launched, the process of merger has been put on a fastrack mode,” a government official separately told the Economic Times newspaper.
Reviving BSNL and MTNL
In 2019 the Indian government approved the revival plan for BSNL and MTNL along with their merger, and approved the reduction in employee costs through Voluntary Retirement Scheme (VRS), debt restructuring by raising of sovereign guarantee bonds and administrative allotment of spectrum for 4G services through capital infusion. The government also approved monetization of both telcos’ core and non-core assets.
In July last year, the Indian Cabinet cleared a Rs 1.64 lakh crore ($20.5 billion) revival package for BSNL and MTNL.
Simultaneously, the government is working on making BSNL competitive by helping it launch 4G services. The BSNL Board on Monday recommended the deployment of 100,000 4G network sites by a consortium led by Tata Consultancy Services (TCS).
The DoT is now expected to seek clearance from the Group of Ministers (GoM) to further issue a purchase order (PO). The GoM is expected to clear this by next month.
According to the Economic Times, BSNL expects a 20% increase in revenue after the launch of 4G services in 2023-24.