While the Department of Telecommunications has announced a strategic collaboration plan between all telecom Public Sector Units (PSUs) to enhance the efficiency of the sector, telecom expert and former Bharti Airtel CEO Sanjay Kapoor is saying that the plan will not give much in return.
The government on Thursday announced a strategic plan for synergizing telecom PSUs of India with an aim of rationalising human resources, pooling of training capacity and other resources, optimum utilization of land and buildings, settlement of legal issues etc to promote ‘Make in India’. “Synergy will leverage individual strengths to create a multiplier effect on the collective capability of the PSUs,” telecom minister Manoj Sinha said. However, Sanjay Kapoor is pragmatic about the development.
He says that the technology is changing rapidly and for keeping up with it, the telecom companies need ‘tons and tons of money’. According to him, the collaboration plan between the uncompetitive telecom PSUs will not work because of the way they work. “Lots of PSUs, who are uncompetitive, are not because they don’t have enough land or people, they are because of the way they function,” he tells CNBC-TV18.
He says that two wrongs don’t make things rights as clubbing two non-sustainable, non-competitive entities are not going to give competitive output in the market. “The rhetoric is right but what it is going to yield is not going to make telecom PSUs more competitive than it was yesterday,” he says, adding that if they are still going to have distinct management, nothing much is going to change.
Meanwhile, on the back of the news, shares of telecom PSUs surged up to 15%, while shares of Bharti Infratel and Idea Cellular tanked nearly 2%. The shares of MTNL surged as much as 14.66% to the day’s high of Rs 25.8 and the shares of ITI Ltd soared 5.95% to the day’s high of Rs 132.5 on NSE.