After several unsuccessful attempts in the last 15 years, the government is once again attempting a merger between state-owned Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL). It has appointed audit and consulting firm Deloitte as the transaction advisor, according to people aware of the matter. The transaction advisor is expected to submit its detailed analysis on the merger in the next six to seven months, sources added.
According to the rough plan, it will take about two years to complete the process because of the complexity involved.
The merger push is being given once again because it’s part of the Rs 1.64 trillion revival package approved by the government in July last year for the ailing BSNL and MTNL. In the Cabinet note, the government had said that it would form a committee of secretaries from different ministries to decide on the merger of the two companies.
Last week, in an interview with Fe, telecom secretary K Rajaraman confirmed that the transaction advisor has been appointed. However, Rajaraman did not disclose the name of the company appointed as the advisor.
“Since MTNL is a listed company, the process takes time. The transaction advisor will have to go through the process related to the merger and then they will come back,” Rajaraman said, adding that the government will also consult Sebi as well later.
Deloitte declined to answer FE’s queries on the merger due to client confidentiality issues.
Prior to the announcement of the Rs 1.64 trillion revival package, the Parliamentary Standing Committee on Communications and Information Technology in March last year also asked the Department of Telecommunications (DoT) to carve out MTNL’s assets and debts through a special purpose vehicle and merge the company’s operations with BSNL.
At that time, BSNL and MTNL CMD PK Purwar told the panel that, “with Rs 26,000 crore debt (MTNL), even if God comes to earth and tries to address its problems, the company cannot be revived. It is a fact of life; we have to accept it”.
In a letter to Prime Minister Narendra Modi last year, BSNL’s employee union had opposed the merger of MTNL with BSNL, saying that the merger will do irreparable damage to the ailing BSNL.
Even the government had put the BSNL, MTNL merger proposal on hold last year due to financial reasons. “The government has approved the revival plan of Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL) on October 23, 2019, which inter-alia includes in-principle approval for the merger of MTNL and BSNL. Due to financial reasons, including the high debt of MTNL, the merger of MTNL with BSNL is deferred,” minister of state for communications Devusinh Chauhan told the parliament last year.
In August last year, BSNL had also formed an internal committee to look into the aspects of the merger.