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The proposal isn’t new and has been hanging fire for over a decade. A need for merger arose when the two couldn’t match up with the increasing private competition in the telecom sector but dwindling finances of both the firms, different employee pay structure, and union protests have been some of the issues that prevented a merger of the two till now.
The merger plan has again been brought to life by the department of telecommunications<\/a> to create a formidable telecom PSU to balance out the market structure and maintain the government’s vision of connecting the nook and corner of ‘Bharat’ with the internet.
The government has been exploring synergies between the two entities where BSNL currently maintains MTNL's mobile network in two operational metros -- Delhi and Mumbai.
But will a merger of two loss making units with high debt a viable option?
It will be a tough call and a complex decision. With MTNL being a listed firm<\/a> many legal complications are bound to crop up.
BSNL, which has recently been given a revival package aimed at changing its declining fortunes, is yet to start 4G services<\/a> at a time when private players are aggressively launching 5G services. MTNL is far off. It is barely managing to survive, the numbers show it all. For the December quarter, MTNL recorded revenues of Rs 329 crore<\/a> with a loss of Rs 778 crore and its total expenditure stands at Rs 1,107 crore. In FY22, BSNL’s revenues declined nearly 4% year-on-year, to Rs 16,809 crore and losses stood at Rs 6,982 crore.
Both BSNL and MTNL both have a huge debt<\/a> of around Rs 30,000 crore each.