The proposed merger between Bharat Sanchar Nigam Ltd (BSNL)
and Mahanagar Telephone Nigam Ltd (MTNL) is likely to
hit a roadblock following stiff opposition from senior
officials of both the state-owned telecom companies.
The internal committee,
which was constituted to study the viability of the merger,
met for the first time on 18 September 2002. Sources say
BSNL and MTNL committee members have decided to oppose
the move towards consolidation. The committee, which also
has representation from the telecom ministry apart from
the officials of both the companies, is likely to submit
its report by December 2002.
We are confident
that we will convince [Communication and IT Minister Pramod]
Mahajan not to move ahead with the merger proposal and
we are confident that he will understand. The move will
not be fruitful, says a BSNL board member.
On 30 August 2002, Mahajan proposed the merger of MTNL
and BSNL. It is believed that he suggested the proposal
to stem any step to divest the governments stakes in
these public sector units (PSUs) by the divestment ministry.
Mahajan is against any move towards divesting the government
stake in MTNL, which is currently at 52 per cent.
has decided to go for strategic divestment of MTNL, which
offers basic and cellular services in Mumbai and Delhi.
A divestment of the consolidated entity will be difficult
as the corporation may be valued at Rs 70,000 crore.
I have asked the
department of telecommunications to prepare a comprehensive
plan to merge the two PSUs and I hope the final decision
will be taken soon. If I can sort out the employees issue
amicably then I will go for merger immediately, Mahajan
had said. He had also said that the division of MTNL and
BSNL was artificial and not functional. MTNL was earlier
a part of BSNL.
MTNL is listed
both in the domestic as well as overseas markets. BSNL
has a net worth of over Rs 60,000 crore and that of MTNL
is about Rs 7,100 crore. BSNL has a staff strength of
nearly 3.5 lakh while MTNL has over 50,000 employees.