This is one of the proposals recommended by IIM-Bangalore in a report on measures for reviving the once crowning jewels of the government.
"The first option of a holding company, with two public...
sector undertankings (PSUs) as subsidiaries, looks most feasible, as of now. In this, MTNL won't have to be delisted. And, we can easily synergise their operations," a leading daily quoted a DoT official as saying. DoT had asked IIM Bangalore to undertake a feasibility report on the merger of BSNL and MTNL. "A final decision is expected to be taken in next few months, which will go for a Cabinet approval subsequently," the official added.
MTNL offers services in Delhi and Mumbai, while BSNL offers its services in rest of the country. The previous government was trying for a merger between the two for quite some time, but faced stiff opposition from the unions.
Recently, both the telecom firms had started synergising their operations in enterprise business.
"Also, there is a plan of MTNL to share spectrum with BSNL to avoid black spots in Delhi-NCR (national capital region). Since NCR comes under the jurisdiction of BSNL, there are issues in offering seamless connectivity to MTNL users outside Delhi," a senior official from MTNL said.
Both BSNL and MTNL have been struggling to stay afloat in the face of tough competition from private players. BSNL posted about Rs 7,600 crore loss for FY15, while MTNL poste Rs 745 crore net loss for the June quarter this year.
BSNL has been taking various measures to come back to profitablity and is focusing big time on data services to improve revenues. BSNL will be investing close to Rs 39,000 crore in the next five years, a major chunk of it on data.
The minister for communications and information technology Ravi Shankar Prasad has been closely keeping a close tab on the performance of both the firms. Even Prime Minister's office has been taking regular meetings with the ministry and company officials to take a stock of the situation and take steps to restore the health of two telecom firms, which once dominated the mobile industry.
Earlier, in August this year, the Cabinet also approved financial incentives for the two. In lieu of returning spectrum, they will be refunded Rs 169 crore (BSNL) and Rs 458 crore (MTNL). Also, the Cabinet gave nod to BSNL to hive off its towers into a separate company, aiming to generate additional revenues.