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Instead of merger plan, operations of listed MTNL will be handed to BSNL, says report
The BSNL-MTNL merger plans have been scrapped, as per the report, and instead, MTNL's telecom operations will be handed over to the much bigger BSNL, as per a report.
BSNL-MTNL merger plans: Instead of merging the two state-run telecom companies BSNL and MTNL as originally proposed, the government may hand over operations of the listed but smaller MTNL to much bigger BSNL, Times of India reported, citing sources.
The new proposal, will first be considered by the Committee of Secretaries (CoS) and then be sent to the Union Cabinet for approval, it added.
For MTNL, which services metros Delhi and Mumbai, this means help from BSNL, while for BSNL it would allow a pan-India presence while working out a revival plan, the report said.
Not Merger, Shifting of Operations Instead
“By not merging the two companies, there is no need to de-list MTNL from the bourses. In case of a merger, MTNL would have to be de-listed and a condition would have arisen to buy back certain number of shares. This can now be avoided as it will be a simple handing over of operations,” one source explained to TOI.
The Department of Telecommunications (DoT) is looking to fast-track this handover so each company can receive its much-needed boost in business. However, both companies have been unable to capitalize on the broader sector boom.
Notably, despite its losses, MTNL's shares have remained in the green, up 139 per cent year-on-year (YoY). They closed at ₹46.3 on July 12. This may change once BSNL takes over operations, as MTNL itself would only be left with the land and buildings.
Business Flailing
Last week, MTNL's CMD RSP Sinha resigned after facing flak over declining revenues and market share. “Yes, I have put in my papers,” said Sinha, who had been given an ad hoc three-month extension in September after his five-year term ended.
Sinha’s resignation also comes amid a debate over the falling revenues and financial performance of the public sector undertaking. MTNL has been suffering a steady loss of market share, especially in its fixed line subscriber base, and is also seeing profits being eaten up by a huge redundant employee base.
For FY24, MTNL reported losses to ₹3,303 crore from ₹2,911 crore a year ago. Further, annual revenue from operations declined by 15 per cent to ₹728 crore in FY24 from ₹862 crore in FY23. MTNL's outstanding debt increased to ₹25,795 crore in FY24 from ₹23,500 crore in FY23.
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Business NewsCompaniesNewsInstead of merger plan, operations of listed MTNL will be handed to BSNL, says report
First Published:14 Jul 2024, 01:49 PM IST
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