For the revival of state-owned, loss-making telecom firms MTNL and BSNL, the government is now toying with the idea of merging the wireless business of the former with the latter.
The wireless business of MTNL is very small — it provides services only in two circles, Delhi and Mumbai, and has a total subscriber base of just 0.36 million.
Though a merger of BSNL and MTNL has been on and off the government’s table for the last several years, this latest proposal of just merging the wireless unit of MTNL with BSNL is being discussed because it is simple to achieve. Since MTNL is a listed entity and BSNL is not, a proper merger between the two would entail a reverse merger process.
Second, transfer of staff is problematic because of seniority and different pay scale issues.
Simply merging the wireless businesses would not need to get into such complexities and would also achieve the purpose of a single government entity having a pan-India mobile operations.
Currently, while MTNL provides mobile services in Delhi and Mumbai, BSNL is not present in these two circles. In the past, both the companies have sought government permission to branch out in areas where they are not present but were not allowed.
While the government may be able to buy some time if the plan to merge the wireless business of MTNL with BSNL finally gets approved, analysts said that it would be a case of too little, too late. Both the companies are saddled with huge staff and stagnant revenues and have been making losses for more than five years now.
For instance, MTNL reported a consolidated net loss of Rs 2,396 crore in 2016-17 against a net loss of Rs1,946 crore in FY16. Its revenue was also lower in FY17 at Rs 3,655 crore against Rs 3,794 crore a year ago.
Similarly, BSNL reported a loss of Rs 7,019 crore in 2013-14 and Rs 8,234 crore in 2014-15. The loss fell by less than half to Rs 3,880 crore in 2015-16. Its revenue increased from Rs 26,153 crore in 2013-14 to `27,242 crore in 2014-15 and to Rs 28,449 crore in 2015-16. The company is yet to announce its FY17 earnings. It has a total mobile subscriber base of 104.55 million.