The Indian government has initiated the process to delist Mahanagar Telephone Nigam (MTNL) from the stock exchanges, in order to facilitate its merger with Bharat Sanchar Nigam (BSNL). MTNL will first be delisted from the foreign exchange market as the first step. Subsequently, MTNL’s shares will also be delisted from India’s stock exchanges, with the government acquiring 90% of the company’s shares. The merger proposal between the two state-owned companies is expected to take around two years to complete. As per the proposed plan, BSNL will absorb MTNL’s wireline, wireless, and enterprise telecom businesses along with its operational assets, while MTNL will be divided into three parts. The first part will include MTNL’s operations, staff, and operational assets, the second part will have other assets and liabilities of MTNL, including its spectrum, and the third part will be Mahanagar Telephone Mauritius (MTML), which is operationally profitable as of now.
As per a government official, BSNL will take over staff, operational assets, and operations of MTNL Mauritius, but it will not acquire the spectrum available with MTNL. Furthermore, BSNL will pay a certain amount to MTNL for taking over its operations along with staff and assets. Other assets and liabilities of MTNL will remain with the company and will be attempted to be sold to clear its debts. BSNL will also acquire MTNL’s land worth INR 12,000 crore, some exchange buildings, and other assets as part of the merger.
MTNL has a total of 3,508 employees across Delhi and Mumbai, and all employees will be absorbed into BSNL as part of the merger. The government had first proposed the merger of the two entities 20 years ago to revive the two companies and rationalize their costs. The companies have been facing financial pressure due to stiff competition from private players in the sector.
In July 2020, the government approved a revival package of INR 1.64 trillion for BSNL and MTNL. In March 2020, the Parliamentary Standing Committee on Communications and Information Technology had also asked the Department of Telecommunications (DoT) to merge MTNL’s operations with BSNL through a special purpose vehicle, while carving out its assets and debts. The government had put the merger proposal on hold in 2019 due to financial reasons. In August 2020, BSNL formed an internal committee to look into the aspects of the merger, while the government appointed Deloitte as the transaction advisor. The consulting firm is expected to submit its detailed analysis on the merger in the next six to seven months.
