Govt shelves BSNL, MTNL merger due to cos’ financial constraints

The government has deferred the merger of Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) due to financial reasons, including high debt of the latter, communications, electronics and information technology minister Ravi Shankar Prasad said on Wednesday.

“However, close co-operation and service integration between BSNL and MTNL has been undertaken,” said Prasad in a written reply in the Lok Sabha.

The Union Cabinet in October 2019 had approved the revival plan of BSNL and MTNL, including their merger that would help turn around the cash-strapped firms. As part of the revival plan, the government also announced a voluntary retirement scheme (VRS) to slash employee cost. MTNL has a total debt of ₹20,000 crore.

The merger and revival plan, which was estimated at ₹69,000 crore, included capital infusion of ₹20,140 crore by the Centre to meet the cost of spectrum for BSNL’s 4G roll-out. In addition, the government will bear the goods and services tax (GST) amount of ₹3,674 crore on the overall spectrum cost.

The turnaround plan included issue of sovereign bonds worth ₹15,000 crore to be serviced by the two companies. Besides, assets worth ₹38,000 crore will be monetised in four years.

In January, the department of telecommunications (DoT) said BSNL and MTNL’s operating performance or earnings before interest, tax, depreciation and amortisation (Ebitda) turned positive in the first six months of the current financial year.

BSNL reported an Ebitda of ₹602 crore for the six months ended September, compared with an operating loss of ₹3,596 crore a year ago. MTNL recorded an Ebitda of ₹276 crore in the first half of this fiscal versus an operating loss of ₹549 crore year-on-year.