Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) service agreement would unify operations and allow for more efficiency. It was already known that BSNL would overtake MTNL operations. MTNL board approved a service agreement between the two companies for 10 years on Wednesday. However, this service agreement has been put on hold by the Department of Telecommunications. The government is checking for the tax implications of the deal.
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The government wants to ensure that the deal between the two companies doesn't result in more costs for them, said a Financial Express report. The Indian government is already carrying the liability of paying sovereign bond dues and doesn't want to carry more costs for the company. MTNL has substantial debt as well, standing at Rs 31,944.51 crore.
BSNL will be tasked with running all of MTNL's operations. This will be to ensure that MTNL can make a comeback in the market and meet the revenues with the expenses. BSNL will be rolling out 4G and 5G in Mumbai and Delhi as well. These regions are currently served by MTNL.
Along with this, the MTNL board approved other things such as the sale of shares in its overseas subsidiary MTML and in MTNL STPI IT Services Ltd. The board also approved the closure of Millenium Telecom Ltd (MTL). These decisions are in line with the Department of Investment and Public Asset Management (DIPAM).
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MTNL has been struggling to maintain its position in the market for years. The telecom company has a modest 0.2% market share with 1.9 million wireless subscribers. Until the decision from the DoT comes, the synergy of operations won't take place. It is worth noting here that BSNL has already been handling the mobile networks of MTNL for a few years now.
