(Last Updated On: November 11, 2015)

In a move to save the public sector telecom operators- BSNL and MTNL, the government has been trying various strategies since quite some time now. They first gave them some relief for their outstanding loans and now the DoT is considering to make them subsidiaries of a new holding company.

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This is strategy was devised by IIM Bangalore in a report on measures for reviving old loss making companies. IIM-B was asked by DoT to undertake a feasibility report on the merger of BSNL and MTNL and that’s how this idea was born.

Another option for reviving these telcos is delisting MTNL first, and then merging it with BSNL as its subsidiary. However, does this might cause a lot of problems too.

The first option of a holding company, with two public sector undertankings (PSUs) as subsidiaries, looks most feasible, as of now. In this, MTNL won’t have to be delisted. And, we can easily synergise their operations. A final decision is expected to be taken in next few months, which will go for a Cabinet approval subsequently” the official said.

It is worth noting that these telcos operate in different circles. MTNL offers its services in Delhi and Mumbai, while BSNL operates in the rest of India. So if one company handles the operations of both these companies, then that parent company would be able to get maximum returns.

The previous government was also trying to merge these companies but couldn’t do so due to protests from the opposition. Now, the same opposition which is in power these days, is trying to do the same thing.

Spectrum Sharing Plans

As per a senior MTNL official, the company has also hatched a plan to share its spectrum with BSNL for overcoming its network coverage issues in some black spots in Delhi-NCR region.

Both these firms have recorded losses in the current year as well with BSNL incurring a loss of Rs. 7,600 crore while MTNL having its losses close to Rs. 745 crore for FY15.

The best move for these telcos to earn maximum profits soon is to invest in data services. The same can be accomplished by improving the quality of its network and also by offering somewhat affordable data plans.

Whether this plan suggested by IIM-B will be implemented or not remains to be seen. But the government should do something for these telcos soon before it gets too late.

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