The merger between state-run telcos BSNL and MTNL is delayed owing to financial reasons. Ravi Shankar Prasad, the minister of Electronics and Information Technology, said the decision has been taken considering several factors. As we already know, the financial situation of both BSNL and MTNL is not in a great position. MTNL, on the other hand, is riddled with high debt at the moment. The minister also said that the government is undertaking a close look at the service integration between BSNL and MTNL. To recall, the Union Cabinet approved the merger plan of BSNL and MTNL back in 2019, alongside providing a major revival plan to the former.
BSNL and MTNL Merger Plan Deferred For Now
In a written reply to Lok Sabha, Ravi Shankar Prasad said the government would undertake "close cooperation and service integration between BSNL and MTNL." As of this writing, MTNL's debt stands at around Rs 20,000 crore.
This decision from the government will not surprise many because the telcos are struggling to compete in the industry. Private telecom operators are investing heavily in 4G services, but both BSNL and MTNL are still offering 3G services to the customers.
At the end of 2019, the Union Cabinet approved a revival package to BSNL and gave the nod to merge two government-owned PSUs. The telcos benefited from this revival package as they were able to cut monthly employee wages with a voluntary retirement scheme (VRS). Overall, the revival plan of the telco was estimated to cost around Rs 70,000 crore.
If everything goes as planned, MTNL will act as a subsidiary of BSNL post the merger, but the confirmation is here that the merger plan is deferred indefinitely. Both the telcos were also expected 4G spectrum from the DoT as part of this revival plan itself.
In January this year, a six-member Group of Ministers (GoM) reportedly called the merger would not have a positive impact on any party. They said the merger wouldn't be 'beneficial' or 'feasible' as the telcos are struggling to have positive cash flow.