India delays planned BSNL-MTNL merger – again

India delays planned BSNL-MTNL merger – again

Only a day after we reported that the Indian government had approved a revival plan for the state-owned telecom companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), it seems that the planned merger of the two businesses has again been postponed.

The minister of state for communications, Devusinh Chauhan, in a statement to the Lok Sabha (the lower house of the Indian Parliament), reminded his audience that the revival plan includes in-principle approval for the merger of MTNL and BSNL. However, he said, the merger had been deferred, citing financial reasons – in particular the high levels of debt of MTNL, estimated at some US$3.4 billion.

It was hoped that the merger would create synergies between the two loss-making entities. India’s Economic Times news service said, however, that there had been strong opposition to the merger from the BSNL Employee Union, which felt the merger would do ‘irreparable damage’ to BSNL’s revival chances.

This saga has been ongoing for more than two years. In October 2019, the Indian cabinet approved a rescue plan for BSNL and MTNL worth Rs 70,000-crore (about US$9.2 billion); it included a voluntary retirement scheme, monetisation of assets, allocation of 4G airwaves, and a merger between the two companies.

This is at least the second time the merger has been deferred. The merger was postponed, again for financial reasons, in March 2021.

However, while a full-blown merger seems now to be on hold it’s worth noting that BSNL took over MTNL’s mobile networks in Delhi and Mumbai in January last year.

Meanwhile BSNL’s plans for an indigenous 4G telecom network are apparently being put into effect. It aims to install about 112,000 towers throughout the country for a 4G telecom network developed in India by Indian engineers and scientists, though precise timings are unclear.

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