BSNL-MTNL may enter a merger (India)Government has initiated steps to merge state-run firms BSNL and MTNL. The proposed merger may happen after BSNL’s initial public offer (IPO), according to government sources.
“The proposal was discussed during the NDA regime and shelved. With BSNL’s IPO looking a clear possibility now, the proposal is being reviewed,” an official in the department of telecommunication (DoT) said. “Once BSNL is listed on the Bombay Stock Exchange, we can explore various possibilities, which may include an open offer or a share swap deal,” he added.
Earlier the proposal was accepted by UPA. But not accepted to the Left parties. With the Left out of the government now, the Centre is likely to push for an early IPO. The government believes there is synergy between the two firms. A merger will result in a combined entity with a turnover of around Rs 45,000 crore.
In comparison, Bharti Airtel had a turnover of Rs 27,025 crore in 2007-08, followed by Reliance Communications (Rs 18,827 crore) and Vodafone (Rs 15,288 crore). MTNL posted an 8.9% increase in net profit to Rs 500 crore in 2007-08 on a turnover of Rs 5,400 crore. According to the official, “The combined entity will not only let BSNL foray into Delhi and Mumbai, but will also strengthen MTNL’s reach.”
