BSNL-MTNL Merger Proposal Postponed Due To Financial Reasons

On Wednesday, the Ministry of State for Communication informed the parliament that the government of India has postponed the merger of state-owned telecom companies BSNL and MTNL because of financial reasons.

Devusinh Chauhan, honourable Minister of State for Communications, has given a written reply in the upper house (Rajya Sabha) stating that the merger proposal of BBNL (Bharat Broadband Network Limited) and BSNL (Bharat Sanchar Nigam Limited) is under consideration. 

Government has approved the revival plan of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) on October 23, 2019, which inter-alia includes in-principle approval for the merger of MTNL and BSNL. Due to financial reasons including high debt of MTNL, the merger of MTNL with BSNL is deferred,” Chauhan said.

PK Purwar, Chairman and MD of BSNL, MTNL Head, proposed in front of a parliament that the telecom department should consider working out MTNL’s debt of around Rs 26,500 crore and its assets under a special proposed entity. Also, he recommended integrating MTNL’s operations with BSNL afterwards. 

With Rs 26,000 crore debt, even if God comes to earth and tries to address its problems, the company cannot be revived. It is a fact of life; we have to accept it,” MTNL CMD told the panel.

After receiving a relief package of Rs. 70, 000 crores in 2019, it was expected that MTNL will turn profitable by 2020-21 and BSNL by 2023-24. 

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