The Union Cabinet has approved the 4G spectrum allocation to ailing telecom PSUs — BSNL and MTNL. The allocation of 4G spectrum to BSNL and MTNL would be done at 2016 prices and administratively. Along with that, it has also given an in-principle approval to their merger.
For their revival, the government has also approved nearly ₹70,000 crore revival package. It includes raising of Rs 15,000 crore sovereign bonds, monetising Rs 38,000 crore worth of assets in the next four years and an attractive voluntary retirement scheme.
MTNL is listed company but has its net worth already eroded. BSNL, on the other hand, is unlisted. While MTNL operates in Delhi and Mumbai, BSNL operates in rest of India and mostly in the hinterlands. The merger of the companies will not take place immediately since MTNL is a listed company and the process would require some time. Till then, MTNL will act as a subsidiary of BSNL.
The merger of PSUs’ have been discussed many times earlier but couldn’t materialise because of the HR and listing issues. As for the financials, BSNL has an estimated loss of ₹14,000 crores in 2019 fiscal and MTNL has also been in deep losses. BSNL has 12 crore mobile subscribers and has grabbed 11 percent market share.
Cut-throat competition and entry of Reliance Jio with free voice calling and cheap data prices has led to consolidation in the Indian telecom sector. Many small telecom operators are shutting shop under losses and currently only Jio, and Airtel are left along while Vodafone and Idea have merged.