Loss-making state-owned telecom service providers, Bharat Sanchar Nigam (BSNL) and MTNL will not be privatised; instead they will be turned around, telecom minister Ravi Shankar Prasad has said.

For the private sector players, the minister?s message is that he?s willing to take a re-look at the merger and acquisition guidelines finalised by the UPA government, if they feel that it is not workable. Also that sufficient spectrum to operators and its optimum utilisation by them will be ensured by him.

In a wide-ranging interview with FE, Prasad, who also holds the law portfolio, acknowledged that there were serious problems with the two PSUs. He also alleged that the previous government had ruined them and was responsible for their current plight. ?BSNL and MTNL were not provided the requisite infrastructure support for 4-5 years by the previous government. There were forces interested that they do not do well and they succeeded,? Prasad said.

Asked how does he plan to turn around the units that have been posting losses for the last 4-5 years and having a miniscule market share of 11%, Prasad said that he has experience in turning around loss-making PSUs and has done so with Coal India when he was coal minister during the Vajpayee government?s regime. ?When I was a coal minister in the Vajpayee government, CIL had a net loss of around R1,400 crore. Within one-and-a-half years, I turned around the company and it posted a net profit of around R1,500 crore,? Prasad said.

The minister declined to give a time-frame for turning around BSNL and MTNL but said that he was closely monitoring them. Though he did not share his strategy for turning them around, he said that a merger between the two was being contemplated.

Prasad, who is overseeing the Digital India project of Prime Minister Narendra Modi, acknowledged that average spectrum holding with domestic operators was small compared to global averages. He also agreed that unless optimal spectrum was not provided to the operators, programmes like e-governance, e-health and e-education would not succeed.

He said that he?s directed his officials to work out the final guidelines for spectrum trading and sharing by the year end. Also spectrum harmonisation is being worked out with the defence ministry so that more 2G and 3G spectrum is released for commercial services. ?Sharing and trading guidelines would be in place by the year-end and so would be the case with spectrum harmonisation. This would lead to auctions. There would be sufficient spectrum with every operator and I would ensure that their optimal utilisation takes place,? he said.

On the M&A norms where the industry has complained that it does not encourage consolidation between big operators, the minister said that he was willing to re-look at it if the industry brings the issues to him. ?If need be, I am ready to re-look at it. Consolidation is only one part of it. The scope should be that there?s enough for everybody,? Prasad said.

Though the current M&A rules has raised the cap on the market share of a merged entity in a circle to 50% from the earlier 35%, it has retained a contentious clause that requires a buyer to pay market-linked prices for spectrum that comes with any acquisition. This clause, most operators say, is the biggest dampener on any meaningful M&A to happen.

There are other hurdles as well. For instance, a merged entity can hold a maximum of 25% spectrum allocated in a service area and 50% in a particular band. This practically rules out any M&A between bigger operators.

Prasadspeak

On PSUs:

* UPA govt responsible for ruining BSNL & MTNL

* No privatisation; the two would be turned around

* Recalls CIL ?revival? by him in previous NDA govt

On private sector:

n Willing to take a relook at the M&A norms

* Spectrum sharing, trading norms will be in place by year-end

* Talks on with defence ministry for release of more spectrum; decision by year-end

* Operators to get sufficient spectrum for data services