Merger With MTNL Hindered by Huge Debt and Difference in Pay Scales: CMD BSNL

By May 28th, 2018 AT 10:19 AM

After going a lot of back and forth on the decision, now the state-owned telco Bharat Sanchar Nigam Limited (BSNL) is of the thought that a merger with MTNL will be a beneficial step for both the entities. However, if both the companies plan to come together and merge, there are a lot of hurdles on the way. Some hindrances which pose a real tough situation for the merger happen to be MTNL’s huge debt and the difference of pay scales between both the telcos, as the official’s remark. Although BSNL has formally thought about the step and a consultant has been appointed, there is no substantial planning which has been done on the telco’s behalf to prove that a merger is on its way for BSNL and MTNL.

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Image Source: BSNL India (Twitter)

BSNL has stricken a deal with Softbank, as a part of which the telco will co-work with the company on “interest areas” and is also in talks with Paytm, a company in which Softbank is invested in, for a tie-up.

As per PTI’s report, Anupam Shrivastava, Chairman and Managing Director said “Merger between the two (MTNL and BSNL) is going to be good for both the companies. Lets take the argument that it is going to be good, but there are various issues that need to be sorted out.”

It was Shrivastava’s take that some impediments which are factoring in as both the telcos discuss the merger are MTNL’s big debt of Rs 16,000 crore and the differences between the pay scale of employees of both companies. Also, MTNL being a widely owned listed entity is bound to pose some obstruction in the merger too.

According to the report, when asked about the same Anupam Shrivastava said “Not at this point of time. The government has appointed a consultant to frame the timeline and roadmap for the merger of BSNL and MTNL.”

This statement came after telecom minister, Manoj Sinha outright refused that there were no plans to merge the two loss-making telcos.

There were also no beans spilt by the CMD when he was posed with questions about the proposed tie-up with the Softbank investee company Paytm. On this, he said “At this point of time, an agreement has been signed (with Softbank) and we are working on various interest areas…Lets see what happens.” This, however, did clarify things a little bit as now we know that whatever deal both the companies make, it is not going to involve a change in equity.

The CMD also clarified it publicly that the telco, despite having massive and wide-spread reach in the country had no intention of venturing into the payments bank sector in the country like many other telcos had done. Although, he did remark that the company would work to promote the mobile wallet application which BSNL had developed in association with SBI.

Even after Reliance Jio stepped into the Indian telecom market, marking its presence by cheaply priced plans and hitting revenue of other companies, BSNL has managed to increase its market share in the time span and the telco said that it would continue to do so. As Anupam Shrivastava said, BSNL hopes to increase revenue along with expanding market share and will develop a strategy to tackle competition by “meeting tariff by tariff.”

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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