BSNL & MTNL Merger – Free PDF Download

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WHAT IS THE REVIVAL PLAN?

In order to revive loss-making telecom PSUs BSNL and MTNL, the government has decided to merge the two ailing firms.
Pending this, MTNL will act as a subsidiary of BSNL.
MTNL is listed but has its net worth already eroded. BSNL is unlisted.

Government wants to make the two state-owned telecom companies more competitive by putting in Rs 29,937 crore.
Government will raise Rs 15,000 crore through sovereign bonds.
Also, assets worth Rs 38,000 crore will be monetised in 4 years.
4G spectrum will be allocated to BSNL and MTNL.
The allocation of 4G spectrum to them would be done at 2016 prices and administratively.
Government will offer an attractive VRS package for employees above 50 years in both the companies.
For example- employee above the age of 53 and half, who opts for the VRS, will be given 125% remuneration of the salary, pension and gratuity till the age of 60.

First of all it provide services in far flung areas where private sector has still not reached.
Helps during disasters by providing connectivity to the people.
The most important, it act as a strategic asset by providing secure network services to the armed forces and intelligence.

In case of Bharti Airtel. In 2018-2019, the total revenue from operations for the company stood at Rs 53,663 crore.
Of this, the employee expense or the money that company spent on its employees stood at Rs 1,720 crore or 3.2% of the total revenue.
As of May 2019, BSNL had 1,63,902 employees. MTNL had around 22,000 people on its rolls.
This puts the total number of employees in the new merged BSNL at 1.86 lakh.
International or past experiences have shown, any merger works only because employees get fired and the merged company is able to bring down their cost of operations.
Will the merged BSNL be able to do something like this?

The accumulated financial losses of BSNL over the last four years stand at Rs 31,847 crore.

In the telecom business, upgrading networks is critical to survival, or otherwise the companies run the risk of becoming obsolete.
That’s exactly what happened to Reliance Communications that took a late decision to shift from CDMA to GSM.
It’s not just late but almost ineffective for BSNL/MTNL to come out with 4G now.