Monday, March 20, 2017

BSNL, MTNL merger to help both: BSNL CMD

BSNL CMD Anupam Shrivastava
BSNL CMD Anupam Shrivastava has said that BSNL-MTNL merger will be benficial for both the units. He adds that the merged unit will be "advantageous" for both the telecom units. He is, however, quick to add that issues pertaining to debt and salary structure will need to be sorted out first.
A Parliamentary panel report has pointed out that the Telecom Department is planning to place the merger proposal before the Cabinet by June.
The Standing Committee on Information Technology has earlier observed that, "On the plan for merger of BSNL and MTNL, the same would be taken to Cabinet before June."
Earlier, a top-level meeting at the Telecom Department last month discussed the possibility of merging both the entities that are facing financial stress due to increasing competition in the sector.
"There is synergy between BSNL and MTNL...There is no doubt about it, especially when we look at the enterprise and mobile business segments," Shrivastava told a news agency.
He said, it would be "advantageous" to the two organisations.
He said certain "impediments" that would need to be sorted out before the merger can actually take place. Variation in salary structure of employees of the two once telecom jewels of the state, which Shrivastava feels will need to be discussed with unions for consensus-building, besides MTNL's debt overhang.
"MTNL has a huge debt and that debt has to be looked into ...It should not happen that after the merger, the entity becomes heavily burdened," Shrivastava said.
On a positive note, a potential merger would enable the corporation to offer pan-India mobile services including in lucrative markets of Mumbai and Delhi, and infuse fresh capital to bolster the network, he said. MTNL offers mobile services in Delhi and Mumbai. BSNL, on the other hand, operates in rest of India.
"For the enterprise business too, a pan-India footprint is important. Typically, large enterprises have headquarters in Mumbai and Delhi, where we are not present. So, a complete pitch requires coordination with MTNL and vice versa," he said.
BSNL's enterprise business is growing at 35 per cent, but a potential merger and a pan-India footprint could push up growth rate to 45 per cent or thereabouts, he added.
The idea of merging the two firms was first mooted years ago by the then telecom minister Late Pramod Majahan and has been discussed. Officials said, however, that the talks on the merger have been revived at the instance of senior officials in the government. On the hurdles to the move staffing and salary related issues pose a big challenge. Also MTNL is debt-laden and while the move will be a positive for it, BSNL will have to bear the brunt. MTNL has been reeling under "serious" debt problem and is borrowing money to meet its day-to-day requirements.
In written reply to the Rajya Sabha in November last year, Communications Minister Manoj Sinha had said: "In case of MTNL, it has been going slow in upgradation of equipment during the last 4-5 years due to severe financial problems. MTNL is under serious debt burden and is borrowing money to meet its day to day requirements."
MTNL's standalone net loss has widened to Rs 819.96 crore, surpassing its total revenue, during the three-month period ended December 31, hit primarily by finance cost. The net loss surpassed its total income of Rs 690.59 crore.
The total debt of MTNL reached Rs 19,418.23 crore at the end of December 31, 2016, from Rs 11,542.3 crore in 2012-13, according to official data. In 2015-16, MTNL reported total annual revenue of Rs 3,197.41 crore and net loss of Rs 2,005.72 crore.
The losses of BSNL have narrowed however to Rs 4,890 crore for the nine month period of the current fiscal, from Rs 6,121 crore in the year-ago period.

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